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Eonfton: FETTER LANE, E.G. 

C. F. CLAY, Manager 

(fftitnburgi): loo, PRINCES STREET 

aSerlm: A. ASHER AND CO. 

ILetpjig: F. A. BROCKHAUS 

^eia Sork: G. P. PUTNAM'S SONS 

Bombag anU Calcutta: MACMILLAN AND CO., Ltd. 

A// rights reserved 












Cambridge : 

at the University Press 

191 1 

CatnfariUgt : 



r 1 1HIS volume completes Part II. of the constitutional and financial 
-*- history of British joint-stock companies to 1720. In its subject- 
matter it is differentiated from the second volume, in so far as in the 
latter most of the undertakings described were related to the shipping 
industry, whereas those, now dealt with, were mainly concerned with 
commerce at home. 

Perhaps the addition of the concluding division, which treats of the 
Crown finances at certain periods, requires some explanation. In this 
and the second volume references have been necessary to the state of the 
credit of the Crown ; and, owing to the comparative treatment aimed at 
in Part I., it was essential to allude frequently to these and similar 
topics. It is unfortunate that there is no modern history of the 
Revenue, and therefore it became necessary to provide certain illus- 
trative statements of it, which, under the various qualifications mentioned 
in Division xv., would bridge the gap to some extent. But to have 
entered on such discussions in detail in Part I. would have been out of 
place, and hence comparatively full tabular statements have been pro- 
vided in this volume, so that reference from Part I. (vol. i.) to these 
may be as easy as possible to the reader. 

In the case of companies, which still exist, I am indebted to the 
officials for information in several directions. The following accounts of 
such bodies have been read either in MS. or in proof by members of the 
directorate or of the staff, who have devoted special attention to the 
early history of the institutions with which they are connected. In this 
way, it is to be hoped that accuracy on many minor points has been 
secured, but, needless to say, I am altogether responsible for the 
explanations given of the phenomena. In addition there are a few 

VI Preface 


undertakings, no longer in existence, concerning which others have 
helped me. In both these connections 1 have to thank the following 
(the special assistance of each being generally mentioned in footnotes) — 
Mr J. S. Barbour, Mr C. A. Denton, Mr George Hakewill, Mr Henry 
J. Maguire, Mr D. McNeil, Miss Maud Sellars, Mr J. F. Stutchbury, 
Mr W. N. Whymper. I have also to acknowledge the courtesy of the 
proprietors of the Accountants' Magazine^ the Journal of the Royal 
Society of Antiquaries of Ireland and of the Scottish Historical Review 
in permitting me to reprint articles which have appeared in these 
publications. These portions of the work have been in some cases 
largely rewritten and in others revised and extended. I am also 
indebted to the Council of the Scottish History Society for allowing 
me to reprint parts of my introduction in the Records of a Scottish 
Cloth Manufactory at New Mills, Haddingtonshire, 1681-1703. 

W. R. S. 

The University 
St Andrews 
April 1911 





Section I. The Hampstead Aqueducts (authorized by act of Parliament to 
the City in 1546 and transferred to a Company in 1692) . . . . 3 

Section II. The London Bridge Water Works (founded 1582): the City 
Conduits Company (about 1693). Amalgamated in 1703 as the London 
Bridge Water Works Company 11 

Section III. The Governor and Company of the New River brought from 

Chadwell and Amwell to London (1609) ....... 18 

Section IV. Other London Water-supply Undertakings — the Governor 
and Company of the Waterwork and Water-houses in Shadwell (1681), the 
Borough Waterworks, Southwark (about 1690), Marchmont's Waterworks 
(1694), Savory's Waterworks (about 1708) 32 

Section V. Water-supply Undertakings in Provincial Towns — at Chester, 
P. Mainwaring and others (1634): at Newcastle, William Gray (1646), 
" the Folly Waterworks" (1680), W. Soulesby (1694), W. Yarnold (1697) : 
at Derby, G. Sorocold (1693): at Liverpool, Water Company (1695), 
Cleave Moore (1709) 34 

viii Contents 



Section I. Companies for the Conveyance of Letters and Parcels — the 
Undertakers for reducing the Postage of Letters to half the former Rates 
(1651-3), the Undertaking of the Penny Post (1680-2) .... 39 

Section II. Street-Lighting Companies — the Proprietors of the Convex 
Lights or the Partners in the Convex Lights (1684-1744), the Proprietors 
of the Light Royal (1687-94), the Proprietors of the Glass Glohe Lights 
(1692) 62 


Section I. The Governor and Company of the VThite Paper Makers in 
England (1686) 63 

Section II. Other Companies for the Manufacture of Paper — the Irish 
Paper Company (1600), the Governor and Company of the Royal Cor- 
poration of London for carrying on the Linen and Paper Manufacture 
within the Islands of Jersey and Guernsey (1691), the Blue Paper 
Company (1691), the Brown Paper Company (1692), Col. John Perry and 
Partners (1709) 71 

Section III. The Royal Lustring Company of England (1688) ... 73 

Section IV. The Governor and Assistants of the King's and Queen's 

Corporation for the Linen Manufacture in England (1690) ... 90 

Section V. Textile Industries in Ireland — the Governor and Assistants of 
the King's and Queen's Corporation for the Linen Manufacture in Ireland 
(1691), the Drogheda Linen Company (about 1691), the Calico-Printing 
Patent of John Pons and otliers (1693), the Flax and Hemp Company of 
Ireland (1696), the Linen Company founded by Louis Crommelin (1699), 
the Governor and Company of the Cambric Manufactory at Dundalk , 98 

Section VI. Companies engaged in Manufactures dealing with Metals — 
the Company interested in the Manufacture and Invention of Milled-Lead 
(1670), the Dipping Company (1691-2), the Company formed to work the 
Patent of John Stapleton for making Brass for Ordnance (1691), the 
Governor and Company for casting and making Guns and Ordnance in 
Moulds of Metal (1693), the Venetian Steel Company (about 1692) . . 105 

Section VII. Glass-making Companies — the Company of Glass-makers of 

Loiidon(1691), the Glass-Bottle Company (1694) 110 

Section VIII. Vegetable Oil Companies — the Annuitants and Sharers in 
the Beech Oil Company ; the Governor and Company for making and 
vending Beech Oil ........... 115 

Section IX. Companies engaged in Miscellaneous Manufactures — the 
Tapestry-makers of England (1619-1703), the Patentees for Lacquering 
after the manner of Japan (1693), the Company for making imitation 
Russia Leather (1691), the Company for making ^^ German Balls" to 
preserve Leather from damp (1693), the Society for improving native 
manufactures so as to keep out the wet (1691) 118 

Contents ix 



Section I. The Industrial State of Scotland in relation to the formation of 

Companies 123 

Section II. The Greenland Fishing and Soap Works Company, or the 

Glasgow Soaperie (1667-1785) . . 130 

Section III. The Sugar-refining and Rum-distilling Companies at Glasgow 
—the Wester Sugar Work (1667), the Easter Sugar Work (1669), the 
South Sugar Work (1696), the King Street Sugar Work (1700) . . 133 

Section IV. Textile Companies. 

A. The Woollen Manufactory at Newmills in the Shire of Haddington 

(1681-1713) 138 

B. Other Woollen Manufactories— Works at Glasgow (founded by 

James Armour, 1688), at Paul's Work, Edinburgh (1683-1708), 
at Musselburgh {} 1695), at Aberdeen (1696), at Glasgow (founded 
by John Corse, 1700), William Hog's Manufacture (.^1703), 
William Black's Manufacture at North-Mills, Aberdeenshire 
(1703), Lyell's Manufactory at Gairdin (1704) ... 158 

C. The Scots Linen Manufacture (1693) 162 

D. The Silk Manufactory (1697) 169 

E. Other Textile and Allied Industries — the Manufacture of Colchester 

Baizes (1693), the Manufacture of Stockings (1700), the Sail- 
Cloth Manufactory at Leith (1694), Rope Work of James and 
Thomas Deans (about 1690), the Rope Manufactory at Glasgow 
(1690), Cordage Manufactory at Glasgow (1700) ... 173 

Section V. The Wool-Card Manufactory at Leith (1663) .... 176 

Section VI. The Society of the White Writing and Printing Paper Manu- 
factory of Scotland (1694) 181 

Section VII. Industries related to Iron, Steel and Mining — Mine-draining 
Engine of Marmaduke Hudson and Partners (1693), tlie Company for 
working Mines and Minerals in the Kingdom of Scotland (1695), Co- 
partnery for the Smelting of Minerals (1701), John Meikle's Foundry 
(1686-1705), Glasgow Hardware Manufactures (1699 and 1700) . . 186 

Section VIII. Glass and Bottle Works— the Glass Works at the Citadel of 
Leith (1664), the Glass Manufacture, North Leith (1699), Works at 
Morison's Haven (1696), Glass Manufacture at Wemyss (1698), the Glass 
Manufacture at Glasgow (1699) 189 

Section IX. Companies formed to carry on Miscellaneous Manufactures — 
Gun-Powder Manufacture of James Gordon and Partners (1690), Gun- 
Powder and Alum Manufactures by Sir Alex. Hope and Partners (1695), 
Leather Works (1695), Leith Combmakers (1695), Leith Saw-Mills (1695), 
Porcelain and Earthenware Works at Glasgow (1703) .... 193 




Section I. The Governor and Company of the Bank of England (1694) . 199 

Section II. The Land Banks — the Bank of Credit on Land Rents (founded 
by Hugh Chamberlain, 1695), the Land Bank, established Anno Domini 
1695 (founded by John Asgill and Nicholas Barbon, 1695), the National 
Land Bank (founded by John Briscoe, 1695), the National Land Bank of 
England (1696) 246 

Section III. The Bank of Scotland (1695) 253 

Section IV. Tlie Bank on Tickets of the Million Adventure or the Million 
Bank (1695-1796) 275 

Section V. The Governor and Company of the Merchants of Great Britain 
trading to the South Seas and for encouraging the Fishing. 

A. The Position of the South Sea Company in relation to Public 

Finance from 1711 to 1719 288 

B. The first group of issues of Capital and Conversions, April to May 

1720 308 

C. The secret history of the South Sea Scheme ..... 314 

D. Loans on Stock, April to June 1720 317 

E. The second group of Subscriptions ...... 320 

F. The beginning of the Collapse, August to September 1720 . . 324 

G. ITie modification of the terms of the second group of Subscriptions 

in September 1720 328 

H. The Parliamentary Enquiry . 331 

I. The final re-adjustment of the South Sea Scheme by Parliament, 

1721 346 

J. The incidence of the losses remaining to be borne after the re- 
adjustment of 1721 . 348 

Section I. The early history of Insurances in England .... 363 

Section II. Undei-takings for Insurance against Fire. 

A. The Insurance Office at the Back-side of the Royal Exchange, or 

the Fire Office, or the Phoenix Fire Office, or Samuel Vincent, 
Nicholas Barbon and their partners for insuring houses against 
Fire, or Barbon's Office (1667-1703) . . . . . . 375 

B. Mutual Societies from 1683 to 1714— the Friendly Society (1683), 

the Hand in Hand Society (1696), the Insurance Department of 
the Charitable Corporation for relief of the industrious poor 
(about 1708-9), the Union or Double Hand in Hand (1714) . 378 

Contents xi 


Tlie Exchange-House Fire Office for Town, the Exchang-e-House 
Fire Office for the Country, the Company of London Insurers or 
the Sun Fire Office (founded 1706-8) 381 

Section III. Undertakings for Insurance relative to Life-contingencies. 

A. The Society of Assurance for Widows and Orphans (1699) . 389 

B. The Proprietors of the Traders' Exchange-House Office for Lives 

(1606-7), the Amicable Society for a perpetual Insurance Office 
(1706) 390 

C. The various schemes for Insurance on Life-contingencies of the 

year 1710 391 

D. The Company of London Insurers upon Lives (1709) . . . 394 

Section IV. Marine Insurance Companies — the Undertaking for insuring 
Ships and Merchandize at Sea (1717), the Undertaking kept at the Royal 
Exchange for insuring Ships and Merchandize at Sea or the Mercers' Hall 
Marine Company ; the Governors, Assistants and Societies of and for the 
Mines Royal, the Mineral and Battery Works and for assuring Ships and 
Merchandize (1718), or the Old Insurance, or Onslow's Insurance, in- 
corporated (1720) as the Royal Exchange Assurance; Colebrook's 
Insurance (1719), Rain's Insurance (1719), Ram and Colebrook's Insurance 
(1719), or Chetwynd's Insurance incorporated (1720) as the London 
Assurance 396 


Section I. Captain Poyntz and Company for planting the Island of Tobago 

(1683) " 415 

Section II. The Governor and Company of Undertakers for raising the 
Thames water in York Buildings. 

A. The Water Supply Company (1665-1719) 418 

B. The Land Development Undertaking (1719) .... 422 

Section III. The Governor and Company for making Hollow Sword Blades 
in the North of England. 

A. The Sword Blade Manufacturing Company (1691) ... 435 

B. The Land Company (.?1702) 436 

C. The Banking Partnership, or Elias Turner Esquire, and Company, 

or the Sword Blade Bank Q 1712) 440 

xii Contents 


FROM SEFrEMBER 1719 TO AUGUST 1720 . . . . . 443 




Index .............. 645 

Facsimile of Freke's List of Prices of Stocks for Saturday, November 12th, 
1715 to Tuesday, November 15th, showing rise in price of stocks on 
receipt of news of the Battle of Preston .... between xii — 1 

Chart showing maximum daily fluctuations of the Stocks of the South Sea 
Company, the East India Company and the Bank of England from May to 
September, 1720 ......... m pocket at end 



12—15 NOVEMBER 1715 

F R E K E'/ P R I G E S of Stocks, ^e 


3lni><« — — 
ll&anh ■ 

Africart . ■ 


RankcraA iTi^nmentsj 
Sourh-Sea Hondt —6, 
Jt>itro ^ — yj 

Eaft-I nd la Bonus — ^ 
Bank ClrciiUtion ^j 



tt4 f 

3/. 10^. 

a 1 





a 50 
a 1x9 
a I 

3/. jf. •) 



12s a 




2 /.I ff, 



ClalEs 1711. Fimd 186670/. 

/«dr Anmtmy for 32 Years, on 
the Pofi'Offite^ leather^ Stamps^ 
H^ckney-Coaehes^ Chairs^ Cards^ 
and Dice* 

Difcount per Cent. 

Firft 1 

^ a 9 


7 a 10 




I3f T 



ClaflJs 171 a. Fund 168003/. 
fir Amnim^ for 32 Years, on 
leather f f^ellttm^ Parctment^ 
Starch, Cofee^ Gold and Sirew 
Wire^ and Stamfis, 

Diicomit per Cent. 

5 a 9 
10 a 4- 








12 4 

HottCV^ x7Xf. Fund 13^000/. per Annunt^ far 31 Years, on Tonnage 
and Poundage^ Cnah and Candles. 

Courfes. Difc. pet Cent 

loi t9 lyo fram 4 *o 6 

Courfes. Difc. per Cent. 

16 to too from a f# 4 

Ho^tcrt 17x1. Fund x6f5oo3/. per /Jnnum, for 32 Years, in three 
Lotteries, on Soap ^ chequer'd and ftrip*d Li nnen^ Paper j and Stamps. 

Courfes. Difc per Cent. I Courfes. Difc per Cent. 

y to ^o from 4^61 8x ro 100 from 7/. to 8/. 
31 to So fr<,m 6 t9 "J \ xoi to t%o from 8 ta 9 

IrOteerB »7»3' f"»<l Jfooof. per ^»7!i»«, for 31 Years, Ciyil Lift, 
^ to 1 from to I. fo 13/. I ax to 30 /r«m a6/. ro 28/. 
10 from 13 f* 20 I 31 fo Ao'from 28 w 29 

5 to 
It to 

10 from Z.O to 26 

iUttcrFi7X4« Ftmd 116573 J. fet Amunu for 34 Years, oaSoap^ Pa- 
per^ chequered and firip'd Unnen^ Starth^ Coals exported^ and Stamps. 

Blanks ^t^per Cent. Prizes at 4 per Cent. 

from 2 1, to 12 I, 

from 12 f« 14 

fr4m 14 to x6 

from 16 to iS 

from 18 r» 20 


x to 10 

1 1 to 20 

21 f» ro 













16 L 



3!0|n jTCCl^C, ^^okcr^ at his Office in (!5pcbange--3Uci», buys and 
qjf^J^ Any Gentleman may have tkis P*jpei left at lus Hoiife 

Facsimile of Freke's List of Prices of Stocks for Saturday, November 12th, 

receipt of news of 

from jrtOiap to Zm^Up Nov. i 5. 1 7 1 5. N® 67 

Antwerpe - 
Hamburg m 
Pans — -* 
Bourdeaux - 
Madrid •— 
Cadix — — 

Courfc of crcljange* 

36 1< 

47 - 

Bilboa — 
Genoua — 
Venice — 
Lifboii — 





CjCCfiequet^ Advanc'd 

I f th 4 Shilling Aid — 1880000 

jda Shilling Aid — 

4ch % Shilling Aid — 

yth a. Shilling Aid — 

Hops « ■ 

Malt 1715 — ■ 

Malt 17x4 

Low Wines 170J 
Candles, c^c. — 
Subiidies 1709 — 


Lottery 1711 — — 
t)itto 1713, Civil Lift. 
Ditto 17x2, in 3 Lotf. 
Ditto 171 4, Benefits — 
Ditto X714, Blanks — 




t 80000 


6 f 0000 


y 00000 


1x1 4840 







1 1 y756o 






paid off. 



Pay.| 3^70 



45- I 

5^ 3 
T 2 







xo Payment 12 
2 Payment S3 




1 Lot. 

2 ditto 

3 ditto 

^ii^ZS^ 17x0, dite Sefttmbtf 29, x<7i4, are.^id ^11 off. 
1B&Unll0 1710, of X4 J. frr Annnm^ for 28 Years, 8 /. 



Years Purchafe. 

x^93, 14/. fet Cent, Excife ■ — ' 

X70f, 3700/. ^^r Week Excife ■■ ' ■ — — 

X7065 J AdditioHal Cuftoms and Excife — • 

1707, Low Wines, Sweets, Pedlars, and Coftoms — 

1708, 80000/. I Moiety of old Tonnage and Pound. 
1708, 40000/. Surpluftes — — . -^— __™ 
9/. perC. for 27 Years } Excife, Raifins, Spices, SnufF 11 
1^?15W X710, for 28 Years i, Coals and Windows ix 

M4- i f 

«y a T 



Eaft-India Sale amounts already to 539400 1. 

The Prices of the Stocks in this Paper are computed from the Morn 
»"g, to Three a-Clock each Day. 

^lls Stocks, and all piiblick Securities, and Ituds Money on the fame. 
Twice » Week, for l^alf A Cw»n aQuartfr. 

1715 to Tuesday, November 15tli, showing rise in price of stocks on 
the Battle of Preston. 

PART II. (continued) 



S. C. HI. 


(Parliamentary powers [granted to the City] in 1546 — 
transferred to a company of above title in 1692 


Although there are many gaps in the history of the water-supply 
of London, there remain sufficient materials to 'indicate the general 
development of the building up of the system that exists at the present 
day. At the time of the Norman conquest and for about a century 
afterwards drinking water was obtained from the Thames and from its 
tributary streams. The latter have now disappeared, but Stow mentions 
four brooks, one called the river Wells, the Wallbrook, another brook 
and the Oldborne. By 1235, these streams had been injured by the 
encroachments of buildings and were in some places partially filled up 
with rubbish, and in that year the brooks, within the City, were confined 
by bricked banks, while reservoirs were constructed, from which the water 
passed by pipes to fountains. These were known as conduits or wells. 
In 1236 the city authorities found it necessary to lay a 6 in. pipe to 
bring water from Tyburn. By 1342, though the conduits were useful 
in their respective areas, the water question had become acute through 
impediments placed in the way of persons desirous of carrying water from 
the Thames. Access to the river was gained by means of narrow lanes, 
and the adjoining householders exacted a toll from those passing 
through, which became a great grievance. An inquisition was held with 
a view to restoring the ancient rights of way. The resulting increase, 
in facilities for drawing water from the Thames, made the supply fairly 
adequate during the next century, but by 1439 it again became necessary 
to bring water from comparatively outlying districts by pipes. In that 
year a deed was signed by the Abbot of Westminster, granting the 
use of springs near Paddington. New conduits were made in several 
places from 1500 to 1528, and in 1535 a grant was executed by the 
Common Council to provide for the laying of pipes to convey water 
from Hackney ^ 

1 Stow, Survey of London, passim', HydrauliUf by W, Matthews, pp. 4-10. 


4 The Hampstead Aqueducts to 1690 [div. vi. § 1 

It ilnfortunately happened that the new conduits availed only to 
maintain the previous volume of water, owing to the drying up of 
some o^ the springs that had been long in use. Consequently, in spite 
of the Expenditure incurred, the supply was inadequate for an increasing 
population, and it became necessary to obtain water from a distance. 
Springs had been discovered at Hampstead, and the City decided, about 
1544, to seek parliamentary powers for the acquiring of land and laying 
of pipes. The act was passed in 1546 ^ and it is of considerable interest, 
not only as the first private act giving compulsory powers, but also as 
constituting the foundation of an undertaking which was afterwards 
transferred to a company still in existence. 

The act 35 Henry VIII. c. 10 states, in the preamble, that sweet 
and wholesome running water from fresh springs was commodious and 
profitable for the inhabitants of cities. The City of London had 
formerly been abundantly supplied, but a recent drought or other 
cause had diminished the supply of water from the springs that had 
been used previously. The Mayor, William Bower, was therefore 
authorized to convey to the City water from springs at Hampstead, 
Marylebone, Hackney, Muswell Hill or other places within five miles 
of the City. The Common Council, as undertakers of the work, was 
permitted to enter any grounds, where springs were to be found, and 
to convey the water by pipes, subject to the payment of compensation 
to be determined by a committee appointed by the Lord Chancellor. 
This privilege was subject to the limitation that water, necessary for 
the use of houses or villages, should not be diverted, nor might the 
servants of the corporation dig in the King's grounds without leave. 
Payment of 1 lb. of pepper annually was to be made to the Bishop of 
Westminster, as Lord of Hampstead Heath. The penalty for resisting 
the servants of the corporation, engaged in the execution of this act, 
was 40,9.2 

It appears that, although the act was passed in 1546, it was not 
until 1590 that the works were completed. There were originally four 
reservoirs at Hampstead from which the supply for the north-west 
district was drawn ^ For over a hundred years, the history of this 
conduit is obscure. During that period the completion of the New 
River'' and the various pumping-engines for raising Thames water solved 
for the time the difficulty of the supply, and it is probable that the 
Hampstead conduit shared the fate of other similar works after the 
Great Fire and, while still in existence, was neglected. 

It has been shown elsewhere how many undertakings had been 

1 35 Henry VIII. c. x. 2 statutes, in. p. 967. 

3 Matthews, Hydraulia, p. 13. ^ Vide infra j Division vi., Section 3. 

Div. Yi. § 1] The Formation of a Company 1692 5 

started from 1691 to 1695\ At that time the New River company 
had at length justified the high hopes of its founder, and the shares 
commanded a considerable premium. In view of this fact, the im- 
provement of the London water-supply was one of the schemes for 
which capital was readily procurable, and amongst the companies, then 
formed, was one intended to improve the Hampstead conduit. This 
company was promoted by William Paterson, the founder of the Bank 
of England, and the original shareholders included John Holland, the 
founder of the Bank of Scotland, Francis Tyssen, a prominent East 
India merchant, Dalby Thomas, Chief-Justice Chester and Sir John 
Trenchard. Paterson had induced the Mayor and Council to grant 
him and his assigns a lease for 31 years of all the rights of bringing 
water from the parishes of St Pancras, Hampstead and Hornsey, which 
were not, at January 10th, 1692, otherwise used by the Mayor or 
Commonalty or by persons claiming under them. The rent, payable 
by Paterson, was £S0 a year, and in addition he had already paid a 
fine of £9^00. To provide working capital, a company was formed 
(which is now known as the Hampstead Aqueducts) with a capital, 
divided into 600 shares of a nominal value of £9.0 each. Thus, when 
the shares were fully paid, the total capital would be <^12,000. By 
an agreement, signed on January 26th, 1692 by the members of the 
company, it was stipulated that 100 shares, of the nominal amount 
of c£^2,000, should be credited to Paterson and two others, who 
had co-operated with him in obtaining the grant and paying the 
£900 to the City, besides discovering certain new springs. These 
100 shares were known as "maiden shares.'"* They were divided as to 
35 to Paterson, 35 to Samuel Tucker and 30 to Israel Hayes. The 
three promoters reserved the right of receiving 100 of the remaining 
500 shares, subject to the payment of £90 as called up. This ac- 
counted for 200 shares. 200 shares were divided amongst nine persons, 
of whom six held 30 shares each. There were still 200 shares to be 
issued. It was agreed that £9 per share on the 500 shares should be 
paid before the last Tuesday in March 1692 and the remainder as 
ordered by the committee of managers. No member was to transfer 
any share after the first Tuesday in May, without having paid it up in 
full. Shares, on which any call remained unpaid for 60 days, were 
subject to forfeiture. This agreement is unique in prescribing the 
liability of the members, which was to extend not only to the amount 
uncalled on each share, or that called but not paid, but also to "the 
payment of the rent of the lease or grant [from the City] and in all 
other costs, charges, damages or expenses, which shall or may arise from 

^ Vide supra f Part i., Chapter xvii. 

6 The Hampstead Aqueducts [div. vi. § 1 

or by reason of the said undertaking.'' Members were entitled to one 
vote for each share. The qualification for a "committee"" was 10 shares. 
The ^'committee of management" consisted of a maximum of 15 and 
a minimum of 9; the majority being a quorum. It was further agreed 
that the £9.00^ paid by the three promoters, should be reckoned as a 
payment on the 100 '' chargeable " shares allotted to them. The com- 
mittee was given powers to negotiate with the City for the acquisition 
of additional springs ^ 

When the pamphlet, entitled Anglice Tutamen^ was written in 1694-5 
there had been dealings in the shares of this company, and hence, in 
that work, it is characterized as one which had suffered the evils of 
stock-jobbing to prevail against it. Therefore, the writer predicted 
that the undertaking would come to grief. Anderson, in referring to 
this prophecy, is in error in saying that the company proved a failure, 
since, at the time he wrote, it was distributing modest but regular 
dividends^. As the shares, unissued in 1692, were placed and the calls 
were paid up, the pipes were extended and consumers supplied in the 
suburban district (as it was then) between Tottenham Court Road and 
Hampstead. Amongst the records of the company there is an old 
collector's book, dated 1762, in which rents were received from houses 
in the following localities. St Ann's Court, Broad St., Denmark St., 
Dudley Court, St Giles, Kentish Town, King St., Queen St., Russell St., 
Soho Sq., Tottenham Court Road, Tyburn Rd., Wardour St., Wind- 
mill St. 

In 1700 the company became involved in a law-suit with a number 
of the residents at Hampstead, who complained that the operations of 
the undertaking had deprived them of water-rights they had previously 
possessed. It soon became apparent that, owing to the period which 
had elapsed since the original act had been granted and the interval 
during which the rights of the City had been in abeyance, the whole 
question was very obscure ; and the complainants, in endeavouring to 
define their grievances, began to dispute amongst themselves. The 
result was a long and involved Chancery suit, and the original complaint 

1 MS. Articles made, concluded, and agreed this 26th January in the fourth year 
of our Sovereign Lord and Lady William and Mary... between Samuel Tucker and 
William Paterson of London, Merchants, and Israel Hayes of London, Gentleman, 
as well for themselves as all others who shall by or under them or any of them be 
admitted partners in the grant, undertaking and things hereinafter declared: in 
Transfer Book A of the Hampstead Aqueducts. (I am much indebted to Mr 
George Hakewill, of the Hampstead Aqueducts Office, 8, Staple Inn, London, W.C. 
for his kindness in placing all the documents relating to this company at my disposal. 
It is on these papers that the following account of this very interesting company is 

2 Anglice Tutamen, p. 27; Anderson, Annak of Commerce (ed. 1790), in. p. 159. 

Div. vi. § 1] Dividends paid 1762 to 1830 7 

against the company was not passed ». While this litigation was im- 
pending and while the success of the undertaking was still distant, the 
price of the shares appears to have been low. William Paterson had 
become liable for a large sum of money to the Darien company, and 
his shares in this and other companies had to be sold^. The holding 
in the Hampstead Waterworks disposed of was one of twenty shares 
for which, in the books of the Darien company, a payment by the 
broker of £9.50 sterling is acknowledged. A subsequent remittance 
of ^50 by the same person probably relates to this transaction, so that 
it may be assumed that the shares were sold at <^15 eachl Although 
this price was 25 per cent, below par, it was higher than that realized 
during the period of depression experienced by water companies from 
1812 to 1815. 

From 1700 to 1761 there is scarcely any information as to the fortunes 
of the company. About 1726 its office was totally destroyed by fire, 
and none of the papers were saved. The earlier part of the eighteenth 
century was a time of keen competition amongst London water com- 
panies, and the district of each was subject to invasion by its rivals, so 
that it was far from easy for the recently established companies to 
make profits. By 1762 the Hampstead company paid "an eighth" 
dividend of 5;y.; but; whether this was the eighth from the foundation 
of the company or from the burning of the papers, does not appear. 
From 1762 down to the present day, dividends have been paid regularly 
each year. 

For the eleven years from 1762 to 1772 a distribution of 5s. per 
share was made annually. This was only 1^ per cent, on the original 
nominal amount of the share. As the company was capitalized (by a 
method to be explained below) the payment per cent, was less. For 
the next nine years, from 1773 to 1781, the annual dividend was 10^. 
per share, or an average of 7*. Qd. during 20 years from 1762. Then 
for the two years 1782 and 1783 there was a relapse to 5s. per share. 
From 1784 to 1798, 7*. Qd. was paid and from 1799 to 1801 the distri- 
bution was again 10^. From 1802 to 1829 the dividend rose, and by 
1830 for the first time 9,0s. per share was paid, or a return of 5 per 
cent, on the nominal amount of the share. But, during the 138 years 
the company had been in existence, large sums had been set aside to 
form a reserve fund and for expenditure on capital account. According 
to a balance-sheet of the year 1834 there was an investment of d^l 1,000 
in 3 per cents, at 91, and it appears to have been the custom of the 
directors to charge 10 per cent, annually of all new works to revenue. 

1 Park, History of Hampstead, p. 74. ^ Vide supra, ii. p. 219. 

3 The Life and Writings of William Paterson, by S. Bannister, London, 1858, ii. 
p. 269. 


The Hampstead Aqueducts [div. vi. § 

The following is a copy of this document, which is of considerable 
interest, as showing the basis on which the capital account of the 
company was compiled: 

Balance-Sheet of the Havipstead Aqueducts for 1834. 
(From the Minute Book beginning May 4th, 1882.) 



£ s. d. 

£ s. 


34. March 81. 

By works producing rental (de- 

ducting empty houses) 


Deduct ordinary expenses ... 1,394 

„ extraordinary expenses 202 13 

„ 10 7o on expenditure of 

£2,285. 12s. on new works 228 10 6 

1,825 3 


1,071 16 


£ s. d. 

£ s. 


534. March 31. 

1834. March 31. 

To dividends unpaid... 76 

By £1,071. 16s. M. at 

To adjustment 

of fine 

10 years' purchase... 

10,718 5 

to the City of London 792 5 6 

By stock on hands (es- 

To balance divided into 



600 shares, g"! ving per 

By £11,000 3% stock 

share, £34. 11*. 4^d. 20,741 10 3 

at 91 


By cash 

641 10 


£21,609 15 9 

£21,609 15 


Probably a few years earlier the amount invested in government 
stocks was larger, for in 1833 a well had been sunk on Hampstead Heath 
and an engine erected to raise the water for supplying the town of 
Hampstead, where, hitherto, the inhabitants had been dependent on 
a water cart, the driver of which charged them ^d. per bucket-full. 
This well provided 200,000 gallons per day and the water was stored 
in eight reservoirs between Hampstead and Highgate\ 

The great obstacle hitherto to the success of the company had been 
the scantiness of the supply it could provide, and, with the addition of 
this new source, its business developed rapidly. The dividend of 20,9. 
per share was continued till 1837. By 1841 it had risen to 30*. and 
by 1844 to 40*. Thus it was only after the company had been in 
existence for more than a century and a half that a dividend was paid, 
which might be considered reasonable, taking into account the capital 
provided from revenue. In fact at this period it is probable that, if 
the shares had been valued relatively to the total existing assets, the 
return would not have been much more than 5 per cent. From 1844 
to 1851 the dividend continued to improve, reaching a distribution of 

Matthews, Hydraulia, pp. 13, 14. 

Div. vi. § 1] Leased hy New River Co. 1859 9 

50^. per share in the latter year. The improvement in the condition 
of the company is shown more by the price of the shares than by the 
dividends. From 1812 to 1815 transfers had been made at £\^ per 
share or very greatly below par. In 1732 sales were recorded at ^17 
and £9.0 and at ^25 in 1733, falling to £9.0 in 1835. By 1848 the 
average of these prices had been doubled, a transfer having been made 
in that year at 40. Ten years later {i.e. in 1858) the price had again 
more than doubled rising to 90, and from 1859 transactions have taken 
place at 100 or over. The advance in the price of the shares in 1858 
and 1859 was due to the transfer of the undertaking to the New River 
company. The Hampstead Aqueducts formed a wedge, driven into 
the New River district. The supply, that was available for the former, 
was limited, and thus the directors could not expect a great expansion 
in business. Therefore, increased profit might only be anticipated in 
the unlikely event of a great rise in rates. It follows that it was to 
the advantage of both companies to effect a working agreement, which 
took the form of the New River company leasing for ever the works of 
the Hampstead Aqueducts, subject to a payment of a yearly rent of 
d^3,500, which admits of a dividend annually of £5. \0s. free of tax 
on each Hampstead Aqueducts share. The latter company continues 
to exist, in its corporate capacity, for the division of the rent amongst 
its members, which was supplemented from time to time by occasional 
bonuses from a surplus fund, which is now (1908) devoted to the pay- 
ment of the largely increased Income tax^ 

Summary of the Capital and Dividends of the Hampstead Aqmdiccts. 

Original Capital 600 Shares of £90 each = ^12,000. 

Prices of Shares and Dividends. 


Price of shares 

Dividend per share 





At least seven dividends 
were paid before 1762 



















1 £3,500 a year, divided among 600 shares would give £5. 16*. 8c?. per share, 
but Qs. Sd. a share is now (i.e. in 1909) required for the payment of Income tax 
{ = 5s. Qd. a share) and the expenses of rent, management, etc. ( = ls. 2d. a share). 
Mr Hakewill has supplied me with this statement of the present position of the 



2 Bannister, Life of William Paterson, n. p. 269. 


The Hampstead Aqueducts [div. vi. § 1 


Price of shares 

Dividend per share 






























55/- (half-yearly) guaranteed 
by New River company 
with occasional additions 

1 In 1859 and 1862. 

2 In 1859. A transfer was made in 1871 at 103, in 1890 at 135, in 1896 at 207. 

WORKS (founded 1582). THE CITY CONDUITS 
COMPANY (founded about 1693). Amalgamated 
WORKS COMPANY (1703-1822). 

Besides the various conduits bringing water to the city, there were 
several inventions, in the latter part of the sixteenth and all through 
the seventeenth century, to force Thames water to a sufficient height 
to enable it to flow by pipes to the houses in the vicinity. One of the 
earliest and the most remarkable of these was a force-pump, invented 
by Peter Morice and established on London Bridge in 1582. Morice 
took advantage of a peculiarity in the construction of the bridge, as 
it existed in his day. Through the small size of the arches and the 
thickness of the piers, at certain states of the tide, there was a con- 
siderable fall of water. Morice's idea was to utilize this to drive a 
wheel which worked a force-pump'. He was able to demonstrate the 
feasibility of this invention, by forcing water over an adjoining church 
spire, and he made an agreement with the Council under which he 
obtained the use of the first and second arches on the north side of 
the river for 500 years from November 24th, 1582, at an annual rent 
of 10^.2 Morice was compelled to establish his entei-prize at his own 
cost, since it was noted in 1593 that "no great man or magistrate" 
would open his purse to help him, the invention not being considered 
" sensible ^" 

In the year 1633 the London Bridge Water Works supplied the 
southern portion of the City as far as Gracechurch St. Morice and 
his successors had the advantage, over other proprietors of engines, that 

1 Tlie wheel, as it existed at a later period, is illustrated in Hydraulia, p. 28. 
There are several old engravings of London Bridge and Morice's wheels inserted in 
a MS., preserved in the Guildhall Library, " A Short Account of the London Bridge 
Water Works and Memorandums relating to their Business." 

2 Chronicles of London Bridge, by an Antiquary [Richard Thomson], London, 
1827, p. 556. 

2 A Brief e Apologie of Gertaine New Inventions whereof there hath bene a publicke 
View taken in London [1593]. Coll. Broadsides Soc. Antiq., No. 91. 

12 London Bridge Water Works 1582-1703 [div. vi. 


they did not need to provide horses for working their pumps, but the 
area to which water could be supplied was somewhat restricted by the — 
rise of the ground, which precluded the water from being pumped so^ 
as to find its way to houses in the higher districts. Therefore, as far as 
can be discovered, the Morice family had a steady business but one 
which had natural limits to its growth beyond a certain point, and, 
during the first half of the seventeenth century, the concern was fairly 
profitable. In the Great Fire the pumping-station was burned down, 
and the third generation of the family, engaged in the water-supply 
undertaking, found some difficulty in obtaining capital to erect new 
works. They eventually succeeded in borrowing =£2,000 on the security 
of the income to be derived in future from the business, but they 
complained that, while the rebuilding was in progress, the New River 
company had laid pipes into the part of South London they had been 
accustomed to supply. Accordingly in 1667 they presented a petition, 
asking that the New River company might be restrained from doing 
so^ From the re-erection of the pumping station until the Revolution, 
the proprietors continued to succeed, as is shown by the numerous 
imitations of their system during the latter part of the reign of 
Charles II. The somewhat reckless promotion of water companies 
from 1692 to 1695 no doubt caused serious competition, and thus, when 
an offer was made for the sale of the works in 1703, the Morices were 
prepared to accept it. 

This offer was made by one of the recently established rival com- 
panies, which had been formed about 1694 by a banker, named Richard 
Soames. Like the Hampstead Aqueducts, other conduits had fallen 
into a condition of bad repair. When the City Council had become 
discredited over the mismanagement of the Orphans'' Fund 2, an act for 
the relief of the orphans was passed, which provided that, besides 
charging the city lands with <£8,000 a year, the rent accruing from 
any future aqueduct should be allocated towards making good the 
deficiency^. Under the spur of this legislation, the Council seems to 
have been disposed to receive offers for the construction of new conduits, 
or the handing over of disused ones to persons who would form a 
company and undertake to pay a certain rent. Soames obtained a 
lease of the conduits from Paddington, Marylebone, Islington, Hoxton, 
Hackney and Dalston, and he established a city office at the Black 
Horse against Poultry Compter. He, with a number of others, who 

1 State Papers^ Domestic, Charles II. _, ccxxix. 162; Calendar, 1667-8, p- 132. 

^ A Collection of the Debates and Proceedings in Parliament in 1694 and 1695 upon 
the Inquiry into the late Briberies and Corrupt Practices, London, 1695, pp. 11-18, 

3 Statutes, VI. p. 464, 

Div. VI. § 2] The City Conduits Company 1693-5 13 

contributed the capital necessary for the extension of mains and the 
laying of service pipes, formed a company known as the City Comhdts. 
There are no details available as to the organization of this company, 
but in all probability its constitution resembled that of the Hampstead 
Aqueducts. In July 1694 the service pipes were being laid into houses, 
and Houghton records his impression that the new company would " make 
us abound with, not only useful, but more pleasant waters than ever^" 
In the following September the company advertized that "the water 
would wash very well, and is as fine as any other whatever and much 
finer than most^." It was announced, too, that in the case of any four 
persons, who lived within a distance of not more than 100 yards from 
an existing pipe, agreeing to take this water, service pipes would be 
laid into their houses. A few months later another advertisement 
appeared, which described the merits of the water in more glowing 
terms as " those fine conduit waters, which have been greatly esteemed 
and desired by all and by long experience approved the best for washing 
and for all other uses and have served the whole City for many hundreds 
of years, being now settled by act of Parliament for the benefit of the 
orphans^" A subsequent notice to intending consumers mentions the 
chief districts into which mains had been laid. There were six pipes, 
one starting from each of the following collecting places — Paddington, 
Marylebone, Islington, Hoxton, Hackney and Dalston. These were 
continued to Aldermanbury, Bond St., Broad St., Bun-hill Fields, 
Charing Cross, Charles St., Cheapside, Coleman St., Cornhill, Duke St., 
Fleet St., Fore St., Germain St., Green St., Grub St., King St., 
Leicester Sqr., Lothbury, Lombard St., Ludgate Hill, Ludgate St., 
Moorfields, Old Bailey, Pall Mall, Panton St., Piccadilly, Poultry, 
Spitalfields, St Albans St., St Bartholomew's Lane, St James' Market, 
St James' Sqr., St James' St., St Paul's Church Yard, Strand, Thread- 
needle St., Whitechapel, Wormwood St. It was added that more pipes 
were being laid daily and would be continued into other streets at the 
request of consumers ^ This list is not only of interest from its full 
record of places supplied, but also as showing the widespread com- 
petition fostered by free enterprize. Several of the places named were 
also supplied by the Hampstead Aqueducts, others again were within 
the districts of the New River, the Thames and the York Buildings ° 
companies. In the struggle to attract consumers, the City Conduits 
offered more favourable terms than had been given by the New River 

1 Collections, No. 103 (July 20, 1694). ^ /^^.^ No. 112 (Sept. 21, 1694). 

3 Ibid., No. 126 (Dec. 28, 1694). * Ibid., No. 133 (Feb. 15, 1695). 

5 Owing to the York Buildings company having carried on other enterprizes 
besides that of water-supply, the account of it is placed with that of similar under- 
takings in Division xii. 

14 The City Conduits Company 1695-1703 [div. vi. § 2 

company. Both undertakings did not guarantee to supply water 
a greater pressure than would enable the basements of houses to bei 
connected. The New River had been in the habit of requiring a 
deposit from new consumers (called a fine), as well as the signature of 
an agreement to take the supply for a number of years. This document 
was called a lease, and a fixed rent was charged irrespective of the 
quantity consumed \ At the end of the seventeenth century both the 
New River and City Conduits charged about 24^. a year rent, but the 
latter exempted its consumers from the payment of a fine or the signing 
of a lease 2. It is on record that this concession by the City Conduits 
had produced " a great fall in the actions of the New River company " 
by 1695 3, and probably the older enterprize retaliated. In 1697 the 
City Conduits made an attack on the New River company by the 
publication of the following advertisement — " in winter or rainy weather 
'tis good for all folks to watch their waters to try whether the City 
Conduits waters be not very clear and most fit for drinking and all 
other uses^"" Although the New River is not mentioned by name, the 
innuendo (that the water supplied from it was muddy) is confirmed by 
other contemporary evidence — for instance Strype asserts that the 
London Bridge company's water " became clear sooner than New River 
water and was ever a clearer waters" 

During the next five years the City Conduits continued to attract 
consumers to the detriment of the New River company and the pro- 
prietors of the London Bridge works. The latter decided in 1703 to 
sell their undertaking to Soames for <£^38,000^. This agreement was 
signed on June 29th, 1703', but Soames had previously negotiated 
through Morice for a lease of the fourth arch of London Bridge for 
m\\ years from August 24th, 1701, at 10^. a year rent and d^SOO fine«. 
This lease, like that made in 1582, was due to terminate in the year 
2082. Soames thus obtained possession of the fu'st, second and fourth 
arches of London Bridge on the northern side. The third arch had 
been leased by the City at an early period as a wharf and could not be 
acquired at this date. . An agreement was also made with Sir Benjamin 
Ayloff, under which ^^300 a year was paid for the use of the adjoining 

1 An original early New River "lease" is preserved at the Guildhall Library, 
MSS. No. 191. In this case the " rent" was 51*. per annum for a ^-inch pipe. 

2 A New View of London, by E. Hatton^ 1708, p. 785. 

3 Anglice Tutamen, p. 27. 

* Houghton, Collections, No. 234 (Jan. 24, 1697). 

• 6 Stow, Chronicle (ed. Strype, 1754), i. p. 27. ^ Ibid., p. 28. 

7 Copy Deed of Covenant from New River company to the Proprietors of the 
London Bridge Water Works in vol. iv. of "MS. Papers Relating to Water 
Companies," Guildhall Library, London. 

* Chronicles of London Bridge, ut supra, p. 556. 



Div. VI. § 2] London Bridge Water Works Go, 1703 15 

site on the river bank, known as Broken Wharf. On this two engines 
were working in 1708\ Thus in 1703 Soames and his partners had the 
City Conduits and the London Bridge Water Works under their control, 
and they were spending capital freely in developing these various under- 
takings. In addition, a further supply from Marylebone, originally 
established by the City, was acquired. This conduit had been let, on 
the passing of the Orphans' act, at an annual rent of J'TOO, one year 
of which was payable in advance with a fine of .5^5,650. This price 
was found burdensome, and the lessees were discharged from the bargain. 
Soames, thereupon, acquired this undertaking also at the same rent, but 
without the fine 2. 

The capitalization of this extensive system was accomplished by the 
formation of a new company known as the London Bridge Water Works 
Company, the management of which was in the hands of a governor and' 
nine assistants. The capital in 1703 was i?l 50,000, divided into 300 
shares of £500 each. Subsequently, each share was divided into five, 
so that, instead of 300 shares of ■£*500 each, the number became 1,500 
shares of ^100 each, and this division was continued during the remainder 
of the company's history ^ 

The energetic management, that had marked the amalgamation of 
the dififerent systems, now united as the London Bridge undertaking, 
was continued. The mains were extended and the Bridge works were 
enlarged. In 1708 there were thirteen engines at work, and at that 
date Goodman's Fields, the Minories, Houndsditch, Whitechapel and 
Birchin Lane were supplied from the Thames ^ In 1718, and again in 
1743, efforts were made to secure the third arch of the bridge but this 
was not acquired until 1761, and the lease in this case also was renewed 
so as to terminate in 2082 ^ In 1765 negotiations were entered into 
for the fifth arch, which were continued for a number of years. 

For a considerable period after the formation of the London Bridge 
company, it appears to have been very successful and to have been a 
dangerous rival to the New River. Dividends were announced in the 
advertisements of meetings in the London Gazette for 1710^ and about 
1778 a reserve fund of .£15,000 nominal in government stocks had been 
formed''. This was only 10 per cent, on the capital and was smaller 
in proportion than the reserve and depreciation funds of the New River 
and Hampstead Aqueducts. 

1 Hatton, A New View of London, p. 791. 

2 Stow, Chronicle (ed. Strype, 1754), i. p. 29. 

3 Deed of Covenant between the New River company and the Proprietors of the 
London Bridge Water Works, ut supra. 

* Hatton, A New View of London, p. 791. 

6 Chronicles of London Bridge, p. 656. ^ E.g. Nos. 3962, 4729. 

7 MS, Short account of London Bridge Water Works [Guildhall Library], f. 21. 

16 London Bridge Water Works Company [div. vi. § 2 

Towards the end of the eighteenth century the company had to facJI 
the loss of supply from the various conduits, since the collecting areas 
had become converted into building ground by the extension of the 
suburbs. As time went on, the Thames became a less and less desirable 
source of supply ; and, when the height of buildings in the city increased 
and water was required on the higher storeys, the machinery at London 
Bridge was no longer able to generate the power required. For these 
reasons, by 1790, the dividend was 3 per cent, and the price of the 
shares 70. From 1794 to 1797 the dividend fell to 2 per cent., rising 
to 3 per cent, from 1798 to 1811 ^ After 1810 the demands on the 
company for very large capital outlay, if it was to hold its own, proved 
to be beyond what the shareholders could provide. Not only was more 
powerful machinery required to increase the pressure, but the action of 
the New River company in laying down iron pipes, in place of the 
wooden ones previously in use^, forced other companies either to follow 
its example or work at a disadvantage. The company was either unable 
or unwilling to adopt any improvements, beyond introducing an iron 
wheel to replace one of the wooden ones of the old type; and, once 
the rebuilding of London Bridge was decided upon, it was seen that 
the company would find it difficult to carry on its business. Had it 
decided to stand on its rights, the erection of the new bridge might 
have been considerably delayed, since the company's lease could not 
have been terminated, without compensation, until 2082. On the 
whole, the company was well-advised in the decision it came to, namely 
to retire from business, provided it could obtain a fair price for its 
property and rights. The New River company was at this date in a 
strong financial position and, after some negotiation, it offered, in 
consideration of the transfer of the greater part of the mains of the 
London Bridge company, to guarantee the same dividend that had been 
paid from 1818 to 1820, namely 2 J per cent., during the remaining 
260 years the leases had to run from 1822^ 

Once this covenant had been signed and the property of the company 
disposed of, there was no reason for its continued existence and it was 
accordingly dissolved by an act of Parliament 3 George IV. 

^ Beportsfrom Parliamentary Committees Session 1821^ v. p. 201, 

2 Vide infra, p. 26. 

3 Deed of Covenant between the New River company and the Proprietors of the 
London Bridge Water Works, ut supra. 

Div. VI. § 2] Capital 1693, Dividends from 1790 17 

Summary of the Capital^ Dividends and Prices of Stock, 
London Bridge Water Works Company. 

Capital .£^150,000 in 1,500 Shares of .^100 each. 

Prices and Dividends. 


Price of shares 

Dividend per cent 






















From 1822 



1 Prior to 1790 numerous dividends were paid. 

2 Guaranteed by New River company until the year 2082. 

s. c. III. 


The foregoing accounts of the Hanipstead Aqueducts and London 
Bridge undertakings show the progress of two typical methods of 
supplying London with water; the former representing the system 
of conveying spring water in pipes from higher ground and the latter 
that of pumping it from the Thames. The utility of each was limited, 
in the one case by the smallness of the supply and in the other by the 
limited powers of the force-pumps, available in the time of Elizabeth 
and the Stuarts. When it is considered that in 1590 the population 
of London was 160,000, it will be seen that, even then, it had become 
necessary to augment the supply by bringing it from a distance \ As 
early as 1577 a plan had been proposed for drawing water from the Lea 
and making a conduit to bear it to London I Towards the end of the 
reign of Elizabeth the Corporation obtained parliamentary powers, 
similar to those contained in the act authorizing the Hampstead 
Aqueducts, enabling it to convey water to the City from any pai-t of 
Middlesex or Hertfordshire ^ No record remains of any effort being 
made to formulate a definite scheme, and it was not till early in the 
reign of James I. that a possible source of supply was selected and 
consideration given to the engineering problems involved. In 1605 
an act was passed, empowering the Corporation to acquire land, suffi- 
cient to excavate a trench for bringing a fresh stream of running water 
from the springs of Chad well and Am well in Hertfordshire. This 
measure provided machinery for the settlement of the price to be paid 
landlords for the ground to be acquired, and it bound the undertakers 
to provide bridges for the public to cross the canal, where such were 
necessary*. A survey was made soon afterwards; and, in deference to 
the views of the proprietors through whose lands the cutting was to 

^ Anderson, Annals of Commerce, ii. p. 235. 

2 Calendar Treasury Papers, 1547-80, p. 569. 

3 Mattliewsj Hydraulia, ut supra, p. 43. 
* 3 James I., c. 18. 

Div. VI. § 3] The New River Scheme 1570-1610 19 

be made, it was enacted in 1606 that the stream should be enclosed 
in "a vault" of stone or bricks This proviso would have increased 
the cost of the work so much that the Corporation did not avail itself 
of its statutory powers. 

After a delay of two years, when it was recognized that the Cor- 
poration would take no steps in the matter, Hugh Myddelton or 
Middleton proposed that, on a transference of the acts being made 
to him, he would undertake to construct the required channel, within 
three years from the date of the signature of the agreement. Accord- 
ingly, on March 28th, 1609, a preliminary covenant was executed and 
a more formal indenture on April 21st of the same year, followed by 
a third dated March 28th, 1611 ^ 

Middleton underestimated the cost of acquiring the land necessary 
for the channel. Although he had compulsory powers for taking ground, 
the owners impeded him in several ways, and many of them endeavoured 
to obtain abnormally high prices for the portions of the estates, pur- 
chased compulsorily. Thus the opposition to the progress of the work 
was " very strong^" indeed in 1610 a bill was promoted in Parliament 
to repeal the acts under which the construction of the channel was 
proceeding. It was objected that the navigation of the river Lea 
would be hindered, mills and meadows decayed and the adjoining lands 
impoverished ^ To this it was replied that the enterprize would be 
highly beneficial to the health of the City, in giving wholesome water 
to the poor; it would also be advantageous in cleansing the sewers, 
cooling the streets in hot weather, for extinguishing fires, besides being 
convenient for cattle^. On the one side it was argued that the City 
should not have transferred its powers to a private entrepreneur-^ while 
upon the other it was contended that, if he proceeded with the work 
after the Council had refused to undertake it, his success would be all 
the more creditable. Besides, attention was drawn to the injustice to 
which Middleton must be subjected, were the parliamentary powei-s 
cancelled, since he had already expended considerable sums and at the 
date of the controversy was employing 1,700 men*. Though the bill 
was not passed, the opposition was sufficiently powerful to cause delay, 

1 4 James I.^ c. 12. 

2 Matthews, Hydraulia, p. 45 ; London and the Kingdom, by Reginald R. Sliarpe, 
1894, II. p. 21. 

3 Copy of the Charter of the New River company: Guildhall Library MSS., No. 
190, printed in The London Water Supply, A Retrospect and a Survey, by R. Sisley, 
1899, Appendix. 

* Objections against the New River : MS. Tanner (Bodleian Library), 98, & 48, 
49, State Papers, Domestic, James L, lxxviii. 106. 

^ Benej&ts of the Proposed New River : MS. Tanner, 98, f. 47. 
^ The State of the Case concerning the Waterwork: MS. Tanner, 98, f., 113. 


20 The New River Company [div. vi. § 3 

and on February 27th, 1611, Middleton was forced to apply for an] 
extension of time to complete the work. 

The attempts made to impede the progress of the enterprize arej 
probably not without bearing on the next important event in the 
history of the New River. This was the execution of agreements on 
November 1st, 1611, and May 2nd, 1612, whereby the Crown, by 
undertaking certain financial responsibilities, acquired a moiety of the 
whole undertaking. There is reason to doubt whether the account, 
given of the motives which led to this transaction, is altogether comw 
plete. It is said that Middleton had found the cost of construction 
much larger than he had expected, and that, after selling shares, his 
resources were exhausted and hence he was compelled to appeal to 
James I. for financial assistance. It will be shown below that the 
whole original capital expenditure was surprisingly smalP, and it would 
not have been outside the capabilities of even a small company. Still 
more significant is it that it does not appear that Middleton sought 
monetary assistance from the City Council, to whom it might have 
been expected he would have first applied 2. Moreover, from the state 
of the Exchequer at this time^, it is certain that no unhesitating 
reliance could be placed on any financial promise made by the Crown, 
and therefore, on the whole, it seems probable that the main motive 
for the agreement was the necessity of securing the intervention of the 
King, in order to overcome the objections of powerful landowners 
whose estates were to be intei^sected by the channel. 

The indentures between James I. and Middleton provided that the 
latter should convey one-half of the whole enterprize to the Crown; the 
King, on his part, undertaking to pay Middleton one-half of all the 
outlay already incurred and to provide one-half of such funds as were 
needed to complete the work*. It follows then that the whole enter- 
prize was divided into two equal moieties (and similarly the capital 
expenditure from the beginning till completion) and that one of these 
was assigned to the King and the other to Middleton. Further, it 
was not long before the second moiety was sub-divided into thirty-six 
parts or shares and these, as will be seen, constituted the New River 

Once the support of James I. had been secured, the construction 
proceeded rapidly, and the New River water was admitted into the 
reservoir at Islington on Michaelmas Day, 1613. Though the main 

1 Vide infra, pp. 21, 31. ^ Sharpe, London and the Kingdom, 11. p. 23. 

3 Vide supra. Part i.. Chapter vii. 

* Indenture between James I. and Hugh Myddleton, May 2, 1612: State Papers, 
Domestic, Close Roll, No. 2,115 (10 James I., Pt, o). 
^ Vide infra, p. 22. 

Div. VI. § 8] Original Capital Outlay 1609-18 21 

capital expenditure had been finished by this time, Middleton experi- 
enced considerable difficulty in obtaining the calls, due on the King's 
moiety, from the Exchequer. It is true that orders were punctually 
made, as each considerable section of the channel was finished^, but a 
considerable period elapsed before all of these were duly honoured, the 
final payment only having been made on September 22nd, 1617. There 
is a complete account of the total sums handed to Middleton, which was 
made up in 1631, consisting of sixteen separate payments (the first of 
which was made on xVugust 26th, 1612) varying from ^£^1,000 each down 
to 1^242. lav. S^d, and amounting in all to ^,262. 9*. bU^ This fixes 
the initial capital outlay which may be detailed as follows: 

Original Capital Expenditure on the New River. 

£ s, d. 

The King's Moiety 9,262 9 6 

The adventurers' moiety, consisting of 36 shares of a par 

value of £257. 5*. 9frf. each 9,262 9 6 

Total of both moieties £18,524 19 

Considering the later history of the New River, this result appears to 
be almost ridiculously small. Further too, it is much below a number 
of estimates, framed on various bases, about the beginning of the 
nineteenth century. According to the figures, given by the company, 
the original cost of construction was at least ^^500,000. This cal- 
culation was issued in an Address- to Occupiers of Houses, during a 
period of somewhat acute controversy on the water-question^; and, in 
view of the circumstances, it would be unreasonable to expect greater 
exactitude than in the electioneering address of a candidate for a seat 
in the House of Commons. William Matthews, writing in 1835, places 
the original cost between ^^00,000 and ^200,000^ Possibly the excess 
of these estimates, over the actual original expenditure, is accounted for, 
partly by their neglecting the lower scale of wages in the first quarter 
of the seventeenth century, partly too by the tendency to endeavour to 
arrive at the expense of reconstructing the undertaking, rather than to 

^ Issties of the Ejcehequer being payments made out of his Majesty's Revenue during 
the Reign of James L, by Frederick Devon, 1836, pp. 156, 172, 190. 

2 State Papers, Domestic, Charles I., cci. 22; cf. An Abstract or Brief Declara- 
tion of the present State of his Majesties Revenew, with the Assignations and Defalcations 
upon the Same, 1651, p. 15; History of England, 1603-16, by S. R. Gardiner (edition 
1863), II. p. 420, 

^ Reports from Parliamentary Committees, Session 1821, v. p. 75. 

^ Matthews, Hydraulia, p. 57. There is a calculation, starting from the terms 
of the assignment of the King's moiety to Middleton in 1631, in "Papers relating to 
Water Companies" at the Guildhall Library, vol. iv., which estimates that the value 
of the share at that time, for the purpose of this transfer, was taken at £280. 


22 The New River Company [div. vi. 

discover the outlay on making it as it was in 1613, from which date 
onwards large sums were disbursed in improvements. However this 
may be, it is important to notice that the original capital expenditure 
of ^^18,524. 19,9. can be supported to some extent from contemporary 
and independent sources. Taking the number of men employed byfl 
Middleton, the time of construction and the rate of wages, the sum so 
arrived at, as spent on labour, would leave an ample margin to meet 
the cost of the acquisition of land and other expenses. Further, there 
is the positive information that the whole expenditure on the first ten 
miles of the New River was d£'3,000\ This was approximately one- 
quarter of the total length, but it is to be remembered that land would 
rise in value nearer to the city, and that provision must be made for 
the supply of mains and service pipes, also for the loss of time before 
James I. countenanced the undertaking, so that, allowing for these 
considerations, the recorded figure of c^l 8,524. 19*'. would, on this basis, 
just about suffice for the completed enterprize. 

Not only was the assistance of James I. important in enabling the 
New River to be finished, but it was helpful in many ways during the 
earliest years of its history. On the one hand he supported the venture 
in which he was interested; while, on the other, he discouraged rival 
concerns. Further, the citizens were urged to use the New River water 
in their houses, and in 1617 the King again aided the partners of 
Middleton in certain transactions relating to a water-house at Dow-gate, 
besides impeding another source of supply, which had been proposed 
at South wark ^ A more signal mark of the royal favour was manifested 
by the grant of a charter of incorporation on June 21st, 1619. This 
document is unique, since it was obvious that James I. could not in- 
corporate himself, and therefore it applies only to the thirty-six original 
shares into which Middleton's moiety was divided. The owners of 
these comprised the corporation which was entitled the Governor and 
Company of the New River brought from Chadwell arid Amwell to 
London. This grant recapitulates and confirms the powers, conferred 
on the City, and sanctions the transfer of them to Middleton. In the 
preamble, it is explained that, by reason of difficulties and delays, the 
charge had been greater than was expected and that Middleton had 
been forced to assume partners. Although the New River water had 
been available for some years, the supplying of it had not as yet yielded 
the profits anticipated, " partly from expenses daily arising far greater 
and heavier than were expected, partly from want of government.'' 

1 The State of the Case concerning the Waterwork : MS. Tanner, 98, f. 113. 
The same statement {i.e. that the first 10 miles cost £3,000) also occurs in the 
Repertory of the CJity, vide Sharpe, London and the Kingdom, ii. p. 22. 

2 A History of Private Bill Legislation, by F. Clifford, 1887, ii. pp. 73, 74. 


Div. VI. § 3] Kiiig's Moiety transferred 1631 23 

It was, ostensibly, to remedy the latter defect that the charter was 
granted. It ordained that the officials of the company should consist 
of a governor, deputy-governor and a treasurer. At all general meet- 
ings five shareholders or adventurers constituted a quorum. It was 
also declared that no person or persons, other than the company, might 
"bring any river to London,"" without its consents In 1621 a bill 
was promoted to confirm the privileges of the company. Another 
effort was made in 1623, and again in 1642, to obtain parliamentary 
sanction of the transfer of the powers granted to the City, but without 

The earliest information of the return from the New River consists 
of the income received by the Crown on its moiety in 1623, which 
amounted to ^£325^ This would give a dividend of a little over £^ 
on each adventurer's share, being a yield of under 4 per cent, on the 
original nominal value; that is only about one-third of the return 
which might have been expected on an investment of a similar degree 
of risk. Though exact particulars are not procurable, it can be shown 
that income had accrued since 1615, for as early as that date there 
were arrears of water-rents. The next light obtainable on the financial 
status of the concern covers the years immediately preceding 1631. 
Charles I. had now entered on his career of personal government and, 
owing to his difficulties with Parliament, was anxious to "improve"''' 
his revenue. Most of the "branches" were investigated, in order to 
discover where an increase might be obtained, and, amongst these, was 
the King's moiety in the New River. P'irst of all, the cost of this 
investment was ascertained, and it is from the itemized account that 
the original expenditure is arrived at^ Further, the income was ex- 
amined and, though the statement (if one was prepared, as is probable) 
has not been discovered, certain deductions founded on it are extant. 
The arrears from 1615 to 1630 were very large, being as much as 
^^2,580. 0^. Sd. in sixteen years. Thus the Crown had lost temporarily 
one-half of this (or <£*1,290. 0*. 4d), or at the average rate of about 
-£'85 per annum. Further, since the King's moiety did not form part 
of the property of the company, a special surveyor was appointed to 
represent the Crown, who was paid .^'lOO a year. The income received 
(presumably after providing for this charge) "did not come one year 

1 Charter, ut supra. 

2 Journals of the Home of Commons, i. pp. 611, 727, n. p. 554. 

3 State Papers, Domestic, James 1., clviii. 59; Gardiner, History, 1628-37 
(1877), II. p. 344. The King's moiety was subject to a charge of £100 for 
a surveyor, but it is to be inferred that the revenue in the text is the income before 
deduction of this expense. 

* Vide supra, p. 21 . 

24 The New River Company [div. vi. § 

with another to dfi^SOO,'^ so, that, while the accounts showed a credit 
of approximately ^485 in favour of the Crown, the amount of the 
arrears and the expense of the surveyor reduced the nett income to 
about i?300. In view of these considerations, Charles I. expressed a 
wish that Middleton should " reduce his moiety into a constant revenue/' 
The method adopted, to effect this object, was an ingenious one. The 
Crown conveyed its moiety to Middleton by a grant dated November 
15th, 1631; Middleton, on his part, guaranteeing the Crown an annuity 
of ^500. Middleton intended to subdivide this moiety into thirty-six 
shares and to charge these with an equal proportion of the annuity. 
Therefore the position in 1631 was that each of these new shares would 
be subject to a liability of ^£^13. 17*. Off/.; whereas the average dividend, 
on the adventurers' shares for some years before, had been only about 
£\\. 9^. Sd. In order to provide an immediate prospect of some in- 
come for the purchasers of the shares, into which the King's moiety 
was to be divided, it was further agreed that the Crown should grant 
to Middleton all the arrears due to it, and these were to become the 
property of the new shareholders \ Since further the annuity was 
guaranteed by Middleton, personally, it was charged on all the shares 
he possessed at the time the arrangement was made. It happened that 
some of the shares in the King's moiety had been already sold and so 
escaped this charge, known as the " King's Clog," which was levied on 
29 J "King's shares" and 1^ "Adventurers' shares." Thus, while the 
clog was levied in this manner — on most of the " King's" and on some 
of the adventurers' shares — the former class as a whole continued to 
be outside the incorporation, that is, for instance, without powers of 
voting for the election of officials. 

The speculation of taking the risk of providing the annuity to 
the Crown of £500 was soon justified by results. The population of 
London was increasing, and was returned at 700,000 in 1636^ The 
dividend on adventurers' shares had been only ^14Mn 1635 but it had 
risen to <£33 in 1640. 

With regard to the financial history of the company, it is thus 
evident that the disposal of the King's moiety constituted a turning 
point in its progress. The same remark is true of the legal status, 
though in this case the turning was in the reverse direction. During 
the reign of James I., the company had enjoyed a full measure of royal 
support, but in the time of Charles I. and the Civil Wars, it had to 
encounter the opposition of the heads of the State. James I. had 
discouraged rival schemes, while Charles I. fostered and encouraged 

1 State Papers, Domestic, Warrant Book, No. 30, Grant to Middleton, Nov. 15, 
1631. 2 Londinopolis, by James Howell, 1657, p. 403. 

* Omitting shillings and pence. 


Biv. VL § 3] Position and Profits 1631-90 25 

them. Thus, in 1631 — the year of the sale of his moiety — he em- 
powered Edward Stradling and his partners to convey spring water 
from Hoddesdon in Herts., subject to an annual payment of ^^4,000 
to the Crown ^, and in the same year he made a grant to Edward Main- 
waring (whose name is associated with a scheme for supplying Chester 
with water) to raise a lottery for a new water undertaking at London I 
Again in 1641 there were two rival proposals for conveying water to 
London from Hertfordshire, neither of which appears to have been 

The most successful period of the operations of the New River 
company, during the first hundred years of its history, was that from 
the Great Fire up to the formation of numerous rival companies in 
1692-3. One effect of the Great Fire was to injure the conduits, 
which had afforded a free, if scanty supply previously. In the rebuild- 
ing, owners of new houses would be ready, even anxious, to have 
supply-pipes laid in. When this opportunity came to the proprietors 
of water-supply undertakings, the New River alone was prepared to 
take advantage of it. The prudent financial methods adopted had 
placed the company in a strong position, while its few rivals were in 
embarrassed circumstances. The owners of the London Bridge works, 
for instance, found it an arduous matter to rebuild their pumping- 
station, without trying to extend their mains ^ Another company or 
partnership, of which Sir William Smith and Sir John Hooke were 
members, had been competing with the New River company ; and it 
was ordered on September 2nd, 1668, by the Privy Council that a 
committee should fix a scale of reasonable rates, so that neither under- 
taking should undersell the other. After more than a month no 
appearance had been made by Smith, and the New River company 
complained that this delay had hindered the laying of mains ^ By 
1680 the dividend had increased to c^l45. 1,9. 8^^. per share: this being 
about ten times the amount paid in 1635 and four times that of 1640. 
No mention of the price of the shares has been discovered relating to 
this time, but it would appear that any shares sold from 1680 to 1690 
may have changed hands at about ^4,500. At this price, the dividend, 
required to give a moderate return, would need to have been higher 
than that paid in 1680, but there is every reason to expect that it 
continued to increase till about 1693. 

It was not long before the great growth in London water companies, 
towards the close of the seventeenth century, began to affect the profits 

^ Fcedera, xx. p. 246. 

2 State Papers, Domestic, Charles I., cLxxvn. 46; Calendar , 1629-31, p. 553. 

^ Matthews, Hydraulia, p. 32. 

^ Vide supra, p. 12. ^ Add. MS. (Brit. Mus.) 15,858, f. 184. 

26 The New River Company [div. vi. § 3 

of the New River company., The York Buildings undertaking had 
been established in 1675 and was transferred to a company in 1690. 
In the latter year, the Shad well company was incorporated, and about 
1692 the Hampstead Aqueducts and City Conduits were rebuilt by 
progressive companies. The remodelling of old sources of supply by 
Soames and the eventual amalgamation of these and the London Bridge 
works in 1701 were especially dangerous. He gave his consumers 
very favourable terms, and it is recorded that the effect of this keen 
competition had been to produce a great fall in the shares of the New 
River company \ In 1698 a price of about d£*4,000 a share is mentioned, 
and in 1700 there is record of a dividend of £91\ per share being paid. 
In 1708 the shares were spoken of as " being somewhat more valuable,*" 
than had been the case recently, and the price then was about 4,500 
guineas 2. 

From 1700 to 1720, the profits appear to have been fairly steady ; 
or, if there was a fall, it had been recovered at the later date, but, 
in view of the increase of building about London, it is a significant 
commentary on the effects of competition that the dividend of 1720 
exceeded that of 1700 by less than £^. Thus in forty years from 1640 
to 1680 the dividend had quadrupled, in the twenty years from 1680 
to 1700 it was increased by one-half, and in the same period from 1700 
to 1720 by only one-seventieth =*. The next price obtainable after 1720 
was mentioned in 1739 and it was c£*5,250. A great part of the 
increase, over that recorded in 1708, is to be attributed to the fall in 
the general rate of interest on capital. 

The competition of the water companies, at the beginning of the 
eighteenth century, no doubt brought better terms to the consumer, 
but in another respect he suffered considerably. The Londoner of the 
present day makes many complaints, concerning the disturbance of the 
streets through repairs of water, gas and electric mains, but the state 
of the thoroughfares, owing to repairs of pipes two hundred years 
ago, must have been something which at present it is difficult even to 
imagine. All mains, at that time, were made of wood, generally of 
the trunks of elm trees, to which leaden service pipes were connected. 
The extreme life of these wooden pipes did not exceed twenty years, 
sometimes it was as little as three years. It often happened that the 
company, prior to 1810, had to lay over twenty miles of mains in a 
year. Another peculiarity of early water-supply arose out of the fact, 
that it was difficult to obtain tree-trunks that would give a sufficient 
bore and it became necessary to lay several sets of mains in the 
same street. When a leak occurred, all of these had to be examined, 

1 Anglice Tutamen, p. 27. ^ Hatton, A New View of London, p. 792. 

3 Vide infra, Summary of Capital a/nd Dividends, p. 31. 


BIT. vi. § 3] Competition in Water Supply 1693-1720 27 

and sometimes as much as 200 yds. of roadway was opened up for 
nearly a month. To modern ideas this would be unbearable in a 
district, served by a single company; but when the undertakings, 
formed in the reign of William III., were competing for consumers, 
it happened that two or even more companies would lay mains in 
the same street. When all these were subject to the same rapid rate 
of depreciation, but requiring renewal at different times, the streets 
were probably more often opened up than available for traffic. The 
companies too suffered from their defective mains, as it was estimated 
that, of the water that was delivered into the mains, only about 75 per 
cent, found its way into the cisterns of consumers. 

In order that the relation of companies to the water-supply of 
London may not be left in a fragmentary condition, it is necessary to 
continue the history of the New River company beyond the year 1720. 
That epoch, so full of disaster or at least of change for the companies 
of the time, left the bona Jide water companies almost unaffected. It 
is true that, for reasons explained elsewhere % the York Buildings 
company was made a medium of extensive speculation ; but this was 
attributable to its character of a land-development, rather than to that 
of a water company. Besides the New River and the York Buildings 
companies, there were the London Bridge, the Hampstead Aqueducts, 
the Shadwell and St Paul's, the Chelsea companies and a number of 
private undertakings. Of these the most important were the New 
River and the London Bridge companies, but it would be a great 
mistake to suppose that the former occupied the leading position that 
it held at the end of the nineteenth century. On the contrary, the 
general opinion in the time of William III. and Queen Anne was that 
the London Bridge company, as reorganized by Soames, was the chief 
water company. Allowing for the fact, that much of the capital outlay 
on the city conduits, incorporated into this system, had been borne by 
the corporation for which the company paid interest in the form of 
rent, it is probable that the whok capital expenditure on this under- 
taking was larger than that on the New River. It had the advantage 
of at least eight different sources of supply, which tended to diminish 
the cost of laying pipes, and the management had the reputation of 
being far-seeing and less exacting than that of the older company. 
Thus it required about a century for the New River to thoroughly 
establish itself, and it was only after the first quarter of the nineteenth 
century that the remarkable improvement in dividend and price of the 
shares began. 

The recent appreciation in the shares, as a species of property, has 
been so remarkable that one loses sight of the slow steps by which it 
1 Vide infra, Division xii.. Section 2 b. 

28 The New River Company [div. vi. § 3 

has been reached, and the large number of causes which contributed 
to this result. Besides, the development of the undertaking in the 
nineteenth century was conditioned by its history in the eighteenth. 
The position of the supply of London, north of the Thames in 1720, ^ 
was instructive. There were four companies and several individuals ■ 
authorized to lay pipes and provide water. Each of them was subject 
to competition from one or more of its rivals, and it is doubtful 
whether the gain in cheapness to the consumer compensated for the 
inconvenience of the general public. Unless each undertaking was 
content to confine itself to a comparatively small area, there was bound 
to be competition until the stronger company had absorbed its rivals. 
The struggle between the chief combatants lasted for over a hundred 
years, and, before it was finally concluded, a new era of strife began 
in the nineteenth century. The conditions that made for success in 
the competition of the eighteenth century were partly natural advan- 
tages and partly skill in management, including prudent finance. The 
New River company was favourably situated in respect to its supply, 
but not remarkably so. The New River proper, that is the springs 
conveyed from Chadwell and Amwell, could not long have sufficed for 
the growing demands made upon them. The wisdom of the committee 
was shown in the early supplementing of the original supply by a new 
one, drawn from the Lea, and, by this acquisition, the company not 
only strengthened its position but made it difficult for its competitors 
to tap new sources on the north of London. Then in respect to capital 
resources, the New River and Hampstead Aqueducts acted prudently 
in placing themselves in a strong financial position, the York Buildings 
company emerged from its speculative operations almost in a bankrupt 
condition ; and the London Bridge, while forming some reserve, had 
not made such liberal allocations to it as the two older companies 
had done. 

During the fifty years after 1720 {i.e. up to 1770) the New River 
company just held its own. In that long interval the dividend improved 
from £91^. \bs. l\d. paid in 1720 to i^255. 13^. \\(U in 1770— an 
increase which was probably less than proportionate to the growth of 
population in its district. But although no gain in profitableness had 
been made, commensurate with the extension of building, all the con- 
ditions were in existence for great future developments at the expense of 
rival concerns. The New River company was in a position to increase 
its supply with the growth of demand, whereas its competitors were not. 
The extension of the suburbs rendered some of the springs no longer 
available ; and, as time went on, water pumped from the Thames became 

1 The dividends paid from 1770 to 1827 are given in Reports from Parliamentary 
Committees, Session 1821, v. p. 206; ibid., Session 1828, viii. p. 56. 

Div. VI. § 3] Extension of the System 1810-59 29 

less and less desirable. Therefore, towards the close of the eighteenth 
century, not only did the New River obtain the custom of most of the 
new consumers in competitive areas, but it drew away business from some 
of the other companies. The effect of these causes is shown both in the 
growth of the New River dividend and (where information is available) 
in the decline of the competing undertakings. It required fifty years 
for the dividend on New River shares to increase (at 1770) by ^^40, 
but in the eleven years from 1770 to 1781 it advanced by nearly d£>90, 
or in other words the increase in eleven years was twice what it had 
been in the previous fifty. By 1788 the distribution per share was 
over =^400, and in 1794 it was more than double what it had been 
in 1720, or more than half as much again as that paid in 1770. 
The highest payment in this series was made in 1805, when it was 
^486. 0.y. 0\d. 

After 1805 the dividend remained over =£^400 until 1811. In the 
latter year, there was an abrupt fall from ^^465. 0,9. ^\d. to d£^282. \%s. d^d. 
The next year, 1812, the distribution was ^220. \%s, 2|J., in 1813 
^113. 18*. l\d. and in 1814 only £^'6. 2,9. Id, The latter return was 
probably the lowest for at least a century and was caused by a com- 
bination of circumstances. In 1810 the company had begun to replace 
its wooden pipes by iron ones, and at the same time there was fresh 
competition from newly formed companies. That of the East London 
company, which had been incorporated in 1807, was specially severe, 
and the fight was waged so fiercely, on both sides, that a series of 
Parliamentary Commissions were necessary to adjust the differences. 

Although the events from 1810 to 1820 involved a temporary 
reduction of the dividend, they eventually resulted in the great success 
of the New River company. The completion of the recently in- 
corporated undertakings led to the assigning of a general sphere of 
territory to each surviving company, while the joint effect of new 
capital outlay on iron mains and the excess of rivalry had been to 
embarrass those, that were weakest, of the older companies. Of these 
the least stable was the York Buildings company. Its directors, since 
1719, had never paid much attention to the waterworks, their specu- 
lations in land had failed, and by 1802 the debts so contracted had 
been liquidated. The water-supply undertakings had long been let on 
lease; and when, in 1818, the New River company had an opportunity of 
arranging with the proprietors, it was decided to take advantage of it. 
The agreement made provided for the leasing of the York Buildings 
undertaking by the New River company for 2,000 years, on consideration 
of the latter paying an annuity of o£'250. 18,?. Qd. to the holders of 
certain York Buildings securities \ 

^ Vide infra, Division xii., Section 2 a. 

30 The New River Company [div. vi. § 3 

When it was decided to rebuild London Bridge, the New River 
company acquired the London Bridge company's goodwill in 1822, 
by paying an annuity of ^^3,750 (or 9,\ per cent, on the stock) for 
the 260 years remaining of the lease granted by the City^ Having 
made this arrangement, the New River company executed sub-contracts 
with the East London company and the proprietors of the Southwark 
Waterworks, which relieved it of d^l,220 of the guaranteed annuity. 
In consideration of transferring to the East London company as m.uch 
of the goodwill of the London Bridge undertaking as fell within the 
district of the former, the New River company received £\Q0 of the 
annuity, payable to the London Bridge shareholders, from the East 
London company. On similar conditions, the proprietors of the South- 
wark works undertook to pay <£*1,060 of the annuity, so that the 
balance to be obtained by the New River company was only ^2,530. 

The last of the early companies to be acquired by the New River 
company was the Hampstead Aqueducts, which was leased in 1859. 
This undertaking had remained in a sufficiently strong financial position 
to be able to increase its supply by sinking a well in 1833% Its 
dividend had improved steadily from 1801, and the New River company 
found it necessary to undertake to make a considerable increase on the 
dividends immediately before the transfer. The total annuity now 
payable to the Hampstead Aqueducts shareholders is c£^3,500. This 
yields £6. 10*. for the original ^^20 share, or 27^ per cent. As shown, 
however, in the account of this company^, the true return is considerably 
less than this, owing to all capital expenditure, after the formation of 
the company, having been provided from undivided profits. 

Some years prior to the acquisition of the Hampstead Aqueducts, 
the New River system, as a modern water-supply undertaking, had 
been welded together. The grant of a private act (which for the 
first time brought the company under direct parliamentary sanction) 
in 1852 may be taken as the outward sign of a new period in the 
interesting history of this organization, which falls outside the scope 
of this work^ 

1 Vide supra, p. 16. ''^ Vide supra, p. 8. 

3 Vide supra, pp. 8-10. 

* For the sake of completeness it may be added that the water-supply under- 
taking, under the Metropolitan Water Act of 1902, has been acquired by the 
Metropolitan Water Board. The company still exists to administer certain real 
property, which was not included in this sale. 

Div. vi. § 3] Capital, Dividends, Prices 1607-1770 31 

Summary of Capital, Dividends and Prices of Shares. 

Original outlay, 1607-15. 
Tlie King's moiety (converted in 1631 into 36 King's 


The adventurers' moiety, consisting of 36 shares of an 
original nominal value of £257. 6s. 9f rf. each, which 
were incorporated in 1619 as the New River 

0,262 9 6 

Total original outlay 

9,262 9 6 
... £18,524 19 

Dividends and Prices of Shares. 


Dividend on an adventurer's share, 
not subject to the " clog" 
£ s. d. 

Price of an 
adventurer's share 


About 9 6 



„ 11 2 31 


1119 P 


14 14 3i 


33 2 83 


145 1 8 


211 16 7i^ 

about £4,000* 


214 15 7F 

4,500 guineas^ 



5,000 guineas ^ 



£5,250 » 
about £5,000 »o 


255 13 11" 


I Vide aupra, p. 24. 

'^ History of the Parish of St Mary, Islington, by S. Lewis, 1842, p. 428. In 1634 
sufficient arrears had been collected to enable £3. 4.S'. 2d. per share to be paid on 
account of these. 

^ History of the Parish of St Mary, Islington, by John Nelson, 1811, p. 166. 

• A True copy of the several affidavits and other proofs of the largeness and richness 
of the mines of the late Sir Carbery Price, p. 2. 

^ Lewis, History, ut supra. ^ Hatton, A New View of London, p. 792. 

^ Nelson, History of ..Islington, p. 166. 

^ Lewis, History, ut supra. '-^ Maitland, History of London, p. 629. 

10 Ibid., p. 1270. 

II Reports from Parliamentary Committees, Session 1828, viii. p. 55. Lewis gives 
the dividend on a King's share in 1766 as £154. 

1'^ Lewis, History, ut »upra. 


The Governor and Company of the Waterwork and 
Water-houses in Shad well (patent 1681, incorporated 

The Borough Waterworks, Southwark (founded about 

Marchmont's Waterworks (1694). 

Savory's Waterworks (about 1708). 

Besides the various companies already mentioned, there were some 
other undertakings which, in the fifty years prior to 1720, supplied 
water to certain districts in London. 

One of these was the Shadwell company which was originated by 
Thomas Neale, who about 1681 obtained a patent authorizing him to 
construct waterworks at Shadwell to supply the manors of Stepney and 
East Smithfield^ Neale, unlike some other patentees, had devoted 
himself to the work for which he had obtained privileges; and, by 1691, 
he had not only erected works and laid pipes into the East London 
district, but had, by " costly experiments,"" found out an improved 
method of supplying Southwark with water, "sweet and clear^'' In 
the following year, he obtained a private act incorporating himself and 
his partners in the Shadwell undertaking, with the usual privileges, 
as the Governor and Company of tlie waterwork and water-houses in 
Shadwell^ with the right of electing a governor and twenty -four 
assistants^. In 1754 the supply was drawn from the Thames by means 
of two steam-engines and distributed by mains of 7 in. bore"*. Towards 

^ Reports Hist. MSS. Com.y xiv., Pt. 6, p. S8 ; Journals of the House of Commons, x. 
p. 679. 

2 State Papers, Domestic, Petition Entry Book, i. p. 176; Calendar , 1690-1, 
p. 497. 

3 Report.s- Hist. MSS. Com., xiv., Pt. 6, p. 83. 
* Maitland, History of London, p. 1272. 


Div. VI. § 4] Other London Water Works 1681-1822 33 

the end of the eighteenth century, the same causes that had injured 
other undertakings, which drew water from the Thames, affected this 
company; and, besides, its business was injured by the West Ham 
company, so that it became necessary to make a call on the proprietors \ 
For a number of years the undertaking was in an embarrassed condition 
and its business was finally taken over by the East London company. 

Neale's petition, offering to supply Southwark with water, shows 
that, at the beginning of the reign of William III., it was considered 
there was still room for a water company south of the Thames. At 
the time the City authorities were disposing of the right to supply 
certain districts, an offer had been made by a group of partners for the 
privilege of working in this district at a fine of ,^550 and a rent of 
£^50 a year, but they failed to find water and retired from the enter- 
prized Thereupon William Gulston took a lease of the south arch of 
London Bridge and erected water-houses, besides laying great numbers 
of "pipes and trunks.'"* In 1691 he was supplying the parishes of 
St Olave and St Saviour, and he petitioned for powers authorizing him 
to open streets for the laying of pipes ^ On August 28th a warrant 
was signed for the preparation of a bill, granting him these powers*. 
In 1770 a steam-engine was erected to improve the pumping^ and in 
1822 a portion of the goodwill of the London Bridge company was 
leased by the New River company to the proprietors of these works ^ 

In 1708 the inventor Savory had a steam-engine at work, which 
supplied a part of Southwark''. 

A somewhat interesting undertaking was one founded in 1694 by 
Hugh Marchant, Marchmont or Merchant, Craven Howard and a 
number of other persons, who had obtained the right of using all 
common sewers within the Bills of Mortality, excepting those in the 
City, to generate power for the pumping of water from the Thames. 
The rent payable was five nobles a year for 99 years ^ By January 5th, 
1696, the partners had erected pumping-houses near Tom's Coffee 
House, at St Martin's Lane and Hartshorn Lane in the Strand", and they 
petitioned for the right to lay pipes. In 1754 the power derived from 
the sewers was supplemented by a windmill at Tottenham Court Road 
Fields ; and, at that date, the company owned three mains of 6 inches 
and 7 inches, and it was in a position to divide profits to the members^". 

1 Observations on the Establishment of New Water Works Companies (Guildhall 
Library). 2 stow, Chronicle (ed. Strype, 1754), p. 29. 

3 State Papers, Domestic, Will, and Mary, Petition Entry Book, i. p. 178; 
Calendar, 1690-1, p. 499. 

4 Ibid., H. O. Warrant Book, vi. p. 165; Calendar, 1690-1, p. 503. 
^ Chronicles of London Bridge, p. 567- 

6 Vide supra, p. 30. ^ Hatton, A New View of London, p. 797. 

8 State Papers, Domestic, Will, and Mary, Petition Entry Book, iii. p. 97. 

9 Maitland, History of London, p. 1268. ^^ ^^• 

S. 0. III. 


Chester. P. Mainwaring and others (1634). 
Newcastle. William Gray (1646). 

"Folly Waterworks" (1680). 

W. Soulesby (1694). 

W. Yarnold (1697). 
Derby. G. Sorocold (1693). 
Liverpool. Water Company (1695). 

Cleave Moore (1709). 

Outside London there was considerable activity in the supplying 
of towns with water. As early as 1634, there is a record that Philip 
Mainwaring (who had a scheme for a London undertaking^) was 
interested, with others, in a water company at Chester^ 

There is also fairly complete information as to the early supply of 
Newcastle-on-Tyne. In 1583 the town was supplied by three conduits, 
but by 1647 there was great scarcity, owing to one of these having 
been declared dangerous to health, and the springs that fed the others 
having been impaired by the sinking of coal shafts^ On July 26th, 
1647, the Corporation agreed to grant certain waste land, known as 
King's Dykes, to William Gray, in return for "his conveying water 
from his conduit in Pandon Bank to Sand-Gate^" Evidently this 
measure only provided a temporary relief, for in 1671 it was necessary 
for the magistrates to prohibit the use of taps in private houses. In 
1680 Cuthbert Dikes proposed to supply the whole town by means of 
an engine pumping water from the Tyne. This engine was erected 
outside the Sand-gate**. Cuthbert Dikes formed a company to carry 

1 Vide supra, p. 25. The Christian name of the promoter of the London scheme 
is entered in the grant as "Edward/' but there is reason to beheve that the person, 
referred to in the text, is intended. 

2 State Papers, Domestic, Charles I., cclxiii. 7; Calendar, 1633-4, p. 513. 

3 History of the Trade and Manufactures of the Tyne, Wear and Tees, 1863, 
p. 190. 

* The History and Antiquities of the Town of Newcastle, by John Brand, 1789, i. 
p. 443. 

^ Ibid., p. 444. 

Div. VI. § 5] Provincial Water-Supply Companies 35 

out his agi-eemeiit with the magistrates and started operations, it is 
said, with a subscribed capital of =£'3,500 ^ The water suppHed was 
not acceptable to the townspeople, and the undertaking was described 
as the "Folly Waterworks." The company transacted business for a 
number of years, and then leased its works to William Yarnold for 
^40 a year. On the failure of Yarnold's venture, the company resumed 
possession and carried on the concern until the great frost of 1739, 
when the works suffered severely, and the prospects were not sufficiently 
encouraging to lead the proprietors to incur the expense of making the 
extensive repairs which were necessary 2. In 1827 the minute books of 
the company were still in existence, but all attempts to trace them 
have failed ^ 

In 1694 there were fresh complaints of the scarcity of water, and 
the Council treated with William Soulesby for conveying a supply 
from springs at Castle Leazes^ In 1697 William Yarnold, who was 
known as the inventor of a pumping engine, brought a scheme before 
the Council, and on October 11th an agreement was made with him, 
which provided that, on his supplying the town with good wholesome 
drinking water, he should receive a lease for 300 years, at 13.y. 4^. per 
annum, of all waste ground, outside the city walls but within the liberties 
of the town. The Corporation also granted him full powers of laying 
pipes, but subject to the rights of existing undertakings. Yarnold's 
scheme was to sink wells and raise the water by means of his engine, 
which was capable of raising 120 tons of water 300 feet in an hour^ 
The site, chosen for the wells, was at a place known as Waterworks 
Farm, about three miles from Newcastle ; and, as the land required was 
outside the jurisdiction of the Corporation, it became necessary to apply 
for parliamentary powers, which were obtained in 1698-9^. Yarnold 
discovered good water and succeeded in conveying it to the City in 
elm-wood pipes. He found, however, that the supply failed in the 
summer, and he was forced to rent the Folly Works. Yarnold ulti- 
mately sold the undertaking, which was acquired by a new company 
formed in 1734 ^ 

Mention is made in 1693 of the enterprise of George Sorocold for 
supplying Derby with water and at that date mains and service pipes 
were being laid. Houghton says that it was probable "this supply 
would be much used^""* 

1 Hist, of the Trade of the Tyne, p. 190. ^ Ibid., p. 191. 

3 Descriptive Account of Newcastle-on-Tyne, by E. Mackenzie, 1827, p. 725. 

* Brand, History, ut supra, i. p. 44o. 

° London Gazette, No. 3581, Marcli 4, 1700. 

6 Statutes, VII. p. 450. ^ Hist, of the Trade of the Tyne, p. 191. 

8 Collections, No. 37, April 21, 1693. 


36 Provincial Water-Supply Companies [div. vi. 

The wave of industrial activity, that was so marked about London 
from 1690 to 1695, extended to Scotland and the provinces. In 1695 
a group of "men from London'"* undertook to supply Liverpool with 
drinking water, obtaining from the Corporation a lease empowering 
them to lay pipes for 100 years. They failed to accomplish the project, 
and in 1709 Sir Cleave Moore proposed to bring water from Bootle. 
An act was obtained authorizing the acquisition of lands, but Moore 
failed to float the company, which was to provide the necessary capitals 
During the remainder of the eighteenth century, Liverpool was " scantily 
supplied"" with water by the agency of water carriers ^ 

1 History of the Commerce and Town of Liverpool, by Thomas Baines, 1852, pp. 
349, 350. 

2 The History of Liverpool, 1810, p. 208. 




The Undertakers for Reducing the Postage op Letters 

TO Half the Former Rates (1651-3). 
The Undertaking of the Penny Post (1680-2). 

After the Civil Wars, there was a considerable increase in the 
demand for postal facilities. Up to the end of the reign of Charles I., 
the service had not proved self-supporting ; but, when Edmund Prideaux, 
who had been appointed Post-master in 1644, had been in office for a 
few years, he claimed that not only had the posts been augmented but 
that they were maintained without a subsidy. Though improvements 
had been effected, the service was not sufficient for the needs of the 
time, and in 1649 the Common Council of the City of London estab- 
lished a postal service to Scotland. The reason given for this step 
was the infrequency of Prideaux' mails, which were only collected once 
a week\ At this period the control of private correspondence by the 
State was considered of great importance, in order that information 
might be obtained as to the state of feeling in the country; and, on 
the petition of Prideaux to the Council of State, the City post was 
suppressed ^ 

In order to secure his monopoly, Prideaux had been compelled to 
produce a statement of the revenue he derived from the posts, with the 
result that the House of Commons exacted a rent of <36'5,000 a year from 
him. The imposition of this annual payment, on the farmer, meant the 
continuance of rates, which might otherwise have been reduced, had the 
State made the latter alternative a condition in the renewal of its contract 
with Prideaux. It appears, then, that the standard charge for a letter 
would have remained at 6d. during the continuance of this farm. 
A new phase of the situation came into existence through the formation 
of a partnership, consisting at first of Clement Oxenbridge, Richard 

1 The History of the Post Office, by Herbert Joyce, London, 1893, pp. 24, 25. 

2 The Post in Grant and Farm, by J. Wilson Hyde, London, 1894, p. 224. 

40 Co. for reducing Postage Rates 1652 [div. vii. § 1 

Blackwell, Francis Thomson a^nd William Malyn, with the avowed object 
of reducing the rate to 3cZ.^ and providing a more frequent service. The 
first four partners were soon joined by others, and they developed their 
postal system vigorously. It is remarkable that the new unauthorized 
service was not interdicted ; especially, since as early as December 6th, 
1652, it was proposed to borrow money, on the security of the rent 
payable by Prideaux^. The probable reason of the inaction of the 
executive is to be found in the fact that the new undertakers were 
favoured by Cromwell and his party ^ 

Thus Prideaux was left to face the competition, that had sprung 
up, as best he could. His agents circulated notices which stated that, 
the new undertaking being unauthorized, letters consigned to it were 
subject to detention, while " the old post will pass freely^'*' Efforts 
were made to stop messengers employed by the new undertakers, with 
the result that there were frequent collisions between the post-boys of 
the rival services, followed by actions at law^ The "new post" was 
still continued, and Prideaux was forced to reduce his rates and to provide 
a more frequent service. To meet this reduction, the new undertakers 
adopted the role of the champions of free enterprize, contending that 
they were justified by " the light of nature in a free state," in opposition 
to a grasping and greedy monopoly^. They appealed to the public, 
stating that, as the benefit had come by their action, so its continuance 
depended on the success of their enterprize'^. 

The bitterness of the contest now extended to the servants of the 
rival posts. Every messenger had to protect the letters committed to 
his charge from the violence of his rivals. Even outsiders joined in the 
fray. A son of one of the old postmasters assaulted a messenger of the 
new undertakers with a sword, and soon afterwards one of their men was 
murdered when in charge of the mails. The campaign, as conducted by 
Prideaux, not only included violence against his competitors but also the 

^ The former rate had been Qd. for a single letter for places 100 miles distant by 
post route from London, that of the new undertakers was 3d for 80 miles and over, 
and 2d. for lesser distances. 

2 Journals of the House of Commons, vii. p. 226. 

3 State Papers, Domestic, Inter., lxvii. 65; The Case of the First Undertakers for 

adducing of Letters to half the Former Rates truly Stated Brit. Mus. '-^ — . 

* To all Ingenious People — A Second Intimation from the New Undertakers for 
conveyance of letters at half the rates to Severall Parts of England and Scotland [1653] 

Brit. Mus. ^ — . As far as can be discovered no copy of a first intimation is 

in existence. 

fi IUd.\ State Papers, Domestic, Inter., lxvii. 65; Calendar, 1654, p. 23. 

^ State Papers, Domestic, Inter., lxv. 51 (1); Calendar, 1653-4, p. 373. 

7 To all Ingenious People — ut supQ-a, State Papers, Domestic, Inter., lxvii. Q5. 

Div. ^^I. § 1] Co, for reducing Postage Rates 1653 41 

forcing of their employees to observe the Sabbath, while the letters com- 
mitted to him were hurried forward on the " day of rest." In spite of 
all obstacles, the new undertakers continued to maintain their service 
and, on the dissolution of the Long Parliament, they received the State- 
despatches, both ordinary and extraordinary. Having met with this 
measure of success, they published their Second Intimation to all ingenious 
People, announcing that, on and after April 28th, 1653, letters would be 
conveyed from London on Tuesdays, Thursdays and Saturdays. Prideaux 
now retired from the contest, and the undertakers took the old posthouse, 
provided packet-boats for the Irish service and laid plans for organizing 
a stage from I^ondon to Yarmouth. 

The success of the partnership was destined to prove the cause of its 
downfall. Though Prideaux received little support from the government, 
the Council of State was forced to take action, when the rental from the 
farm of the posts was in danger of being lost. It was decided that 
tenders should be invited for a new farm. The undertakers showed that 
their whole charge and losses had been £5,146. 10s. 8d., their returns 
were dfi'1,907. 14^. 5d., leaving a balance of nett loss, at this date, of 
^3,238. 16.9. Sd.^ They were called before the Committee of the Council 
of State, that had been appointed to consider the farming of the posts ; 
and, according to their account of the interview, they were assured that 
they should have the refusal of the farm and that, if their offer was not 
accepted for any reason, they should be reimbursed their expenditure. 
Accordingly, the company agreed that one of the shareholders, named 
Benjamin Andrews, should offer a rent of i^9,100 a year, which it was 
stipulated was to be devoted to the relief of disabled soldiers. Owing to 
the financial necessities of the government 2, this proviso was considered 
objectionable. A Captain John Manley was favoured by the Committee, 
but his tender was less than that of the undertakers. An arrangement 
was however made, under which Manley was permitted to raise his offer 
to the highest amount handed in. This was <^10,000, and, after half-an- 
hour's deliberation on June 29th, 1653, the Committee accepted Manley, 
as farmer of the inland posts ^ This was followed by an order to the 
undertakers, dated the following day, commanding them to hand over all 
letters to Manley at midnight-*. The undertakers considered that they 
were aggrieved by this decision, since they contended that, if credit was 
given them for their outlay (as they said had been promised), their offer 
was in reality better by .^2,000 than that finally made by Manley^ In 

1 State Papers, Domestic, Inter., lxv. 51; Calendar, 1658-4, p. 372. 
^ Vide supra, Part i. , Chapter xiii. 

3 State Papers, Domestic, Inter., xxxvii. 152-8; Calendar, 1652-3, p. 450. 
* State Papers, Domestic, Order of Council of State, June 30, 1653; Calendar, 
1652-3, p. 456. ^ Ibid., lxvii. 66-8; Calendar, 1654, p. 25. 

42 Co. for reducing Postage Rates 1653-4 [div. vii. § 1 

the brief space left them, before the order of the Council was to take 
effect, they pleaded vainly for a postponement of the hour of transfer, 
but the most that they could gain was a grudging permission to deposit 
the moneys belonging to the post-office in the custody of an impartial 
person, pending the confirmation of the Order of the Council. While 
this arrangement was being made, other events were in progress, which 
made the evening of June 30th a stirring one. Manley had mustered 
and armed a following, consisting of his friends and servants of the "old 
post." This body marched on the head-quarters of the undertakers, 
made a forcible entry, seized the books and ejected the clerks who had 
been in possession. Some of the leading shareholders had assembled at 
the house of one of their number in Wood Street, to which some letters 
for the outgoing mail had been removed. Manley, hearing of this, broke 
into the house, secured the letters and pursued his rivals, who were com- 
pelled to barricade themselves in a room, to which they had retreated. 
It was by these drastic methods that the transfer of the posts was 
effected \ 

The undertakers, having been forced to resign possession, endeavoured 
first to obtain redress, petitioning the Council of State on January 30th, 
1654, but without results Afterwards, they attempted to secure a 
reimbursement of their outlay, but the Committee of Posts reported 
adversely on March 13th^. Technically, Oxenbridge and his partners 
were interlopers, who carried on an unauthorized service. Since Prideaux 
had been legally appointed farmer in consideration of his paying a sub- 
stantial rent, he should have been supported by the executive. Such 
support not being forthcoming, the undertakers were able to show that 
there was a reasonable probability that, in time, the reduction of rates, 
which they had inaugurated, would result in an increase of revenue. By 
establishing this principle, they had performed a public service ; and, after 
the Revolution, this was recognized in the case of one of the founders of 
the enterprize. Oxenbridge was then an old man in straitened circum- 
stances, and he was allowed £60 a year from the profits of the post-office. 
After his death this pension was continued in favour of his widow*. 

For more than twenty-five years the history of the post-office consists 
first of efforts to improve the organization, and subsequently to increase 
the revenue obtainable (which had been settled on the Duke of York 

^ State Papers, Domestic, Inter., lxvii. 65 ; Calendar, 1654, p. 24. 

2 xi^cL., Lxv. 51; Calendar, 1653-4, p. 372. 

3 Ihid., LXVII. 69; Calendar, 1654, p. 25. 

* Treasury Papers, xliii. 58 ; Calendar, 1697-1702, p. 13. For a short time after 
the Restoration, Oxenbridge was employed in the post-office, but his name does not 
appear in a list of the officials compiled about the end of 1661 — The Post in Grant 
and Farm, pp. 257-9. A good account of the organization of the " New Under- 
takers" is given in this work, pp. 225-33. 

Div. vn. § 1] Undertaking of the Penny Post 1679 43 

after the Restoration) on the basis of maintaining the existing rates. 
The increase in the number of letters in England during the reign of 
Charles II. was described by a contemporary writer as being "so 
prodigiously great that the Post-Office was farmed at =£^50,000 a year\"''' 
As yet, however, London itself was poorly supplied with postal facilities. 
Letters, written in one part, had to be sent to another by means of a 
special messenger, either by a servant or by a porter. The officials of 
the post-office were far from recognizing that a new class of business was 
waiting to be developed, and it remained for a private company to 
establish a local post for London. This scheme was under consideration 
in the closing months of 1679 and early in 1680^ Many claims have 
been advanced on behalf of different persons as being " the inventor " of 
the new post, which was eventually established at a penny rate. The 
names of three men, who subsequently became important promoters of 
new enterprizes, are frequently mentioned in connection with the incep- 
tion of "the Penny Post.'' These were Hugh Chamberlain, Robert 
Murray or Moray and William Dockwra^. The adjudication between 
the claims, made on behalf of each, is complicated by the fact that most 
of the information relating to this enterprize is derived from statements 
furnished by Dockwra, and there were reasons which led him to give the 
maximum degree of weight to his own share in the founding of this post. 
On the other hand, the question is simplified to some extent when it is 
noted that the idea of a penny -post was not a new one, having been 
formulated in 1659 by John Hill of York''. The idea having been in 
existence for a considerable time, it is by no means improbable that it 
may have occurred to several persons that the period from 1679 to 1680 
was a suitable one to put it into practice. From the connection of 
Chamberlain and Murray with various financial schemes it may be 
inferred that it was to these that the proposal for insuring the contents 
of letters up to a value of d^lO was due'^, while Dockwra was responsible 

1 The Merchant's Dayly Companion, by J. P., London, 1684, p. 388; cf. Financial 
Statements L and M. 

2 Anthony A. Wood gives the date as "the latter end of 1679." Athena 
Oxoniensis, London, 1817, m. p. 726. Tliis may mean January to March 16,|§. 

3 As to Chamberlain— ITercwrms Civicus, No. 4, April 1, 1680, London Gazette, 
No. 1614, May 20, 1680; as to MxirTaj— Inquiry into Authenticity of certain 
Miscellaneous Papers .. .attributed to Shakespeare, by Edward Malone, 1796, p. 387; 
Anderson, Annals of Commerce, iii. p. 88 ; Wood, Athence Oxoniensis, iii. p. 726. 
In the latter it is said that Dockwra lost the benefit " by a wrong name only," Anglia 
Metropolis, p. 345: as to Dockwra vide subsequent references, and Daily Courant, 
No. 229, Jan. 11, 1703; An Essay upon Projects [by D. Defoe], 1697, p. 27. 

* A Penny Post, London, 1669 [Brit. Mus. 1391 . e . 25]. 

s Murray is said to have been the founder of the "'Bank of Credit," while an 
account of Chamberlain's Land Bank will be found infra, Division x.. Section 2. 



44 Undertaking of the Penny Post [div. vii. § 1 

for the actual organization of the system by which letters were collected 
and delivered \ 

Early in March 1680 the scheme was well advanced. A company was 
formed, and an elaborate constitution appears to have been under con- 
sideration, since it was at one time proposed to have trustees in addition 
to a committee of management^, it being the duty of the former to hold 
certain property or security, vested in them, to ensure the payment of any 
claims that might be made on account of letters or parcels lost in transit. 
Since the preliminary outlay was very small, it would not be necessary to 
subscribe capital at the beginning ; but, once operations had been begun, 
it was found that the receipts did not meet the expenses, and the deficiency 
had to be provided by the shareholders. Thus the initial cost of estab- 
lishing the enterprize, arrived at in this way, would constitute its capital. 

The scheme was conceived in a liberal spirit. The service was made 
available to the public on Lady-Day (March 25th), 1680. The sum of 
1^. would pay for the collection at any one of the receiving-houses (of 
which there were eventually 400) and for delivery at an address within 
the Bills of Mortality. Further, this rate would secure transmission to 
the places of collection in Hackney, Islington, South Newington Butts 
and Lambeth, or, if the addressee desired his packet to be left at his 
residence, this further service could be obtained by the payment of an extra 
penny. Collections and deliveries were to be made frequently daily, 
except Sundays and the following holidays — three days at Christmas, 
two days each at Easter and Whitsuntide and January SOth. Besides 
letters, parcels (not exceeding 1 lb. in weight and ^10 in value) were 
taken at the rate of \d. each, and the undertakers engaged to compensate 
the owners of such packets as were lost in their post ; there being no extra 
charge for such insurance ^ 

The company soon found itself confronted with numerous difficulties. 
Though the idea of a cheap local post had been long under consideration 
amongst men of enterprize, there were many who regarded the project as 

1 Thus Dockwra stated a previous scheme " was rejected as impracticable^ as 
indeed were all the rest of their notions, nor ever was by any of them [i.e. Foxley, 
Henry Neville, Payne, Murray, Chamberlain] or any other person whatsoever, put 
into any method to make it practicable." Daily Gourant, Jan. 11, 1703. 

2 Hugh Chamberlain was to have been one of the Trustees. This is said to have 
been his only actual connection with the founding of the undeiiaking. London 
Gazette, May 20, 1680. 

3 A full account of the organization of the penny post is given by Harry J. Maguire 
in William Dockwra and the London Penny Post of 1680 {Gibbon's Monthly Journal, 
xviii. pp. 16, \1, 67-9, 89, 90). I am much indebted to Mr Maguire for his 
furnishing me with valuable information in addition to that contained in this article, 
also for reading this account in MS. and making several suggestions. Many of the ''\ 
sources of information referred to below have been printed in the Stamp Lover, No. 1, 

et aeq. Cf. Joyce, History of the Post Office, pp. 33-42. 

Div. vn. § 1] Orgmuzation and Prospects 1679-80 45 

chimerical — like " those others we have formerly heard of, sailing against 
the wind or paying debts without money i.'' The chief obstacles consisted 
in the want of numbers on the houses (which made accurate and quick 
delivery troublesome) and the hostility of the porters, who had formerly 
derived employment from the carrying of letters. Sympathizers spoke of 
the "ruine of the poor porters^," who revenged themselves by tearing 
down the signs, used to distinguish the receiving-offices, until they were 
deterred by* prosecutions at the Sessions I The delay, occasioned by the 
want of a precise system of street-numbers, became a frequent source of 
complaint, and the company had to publish advertisements asking the 
indulgence of the public until the service was fully organized and its 
letter-carriers became more experts 

In one important respect, the company found itself in a dilemma. To 
attract custom, it was necessary to advertize, and accordingly notices were 
inserted in the papers before the offices were opened; while, during the 
first months of the history of the post, every excuse was taken of drawing 
public attention to it in the press % while a broadside was printed for 
gratuitous distribution I The danger of publicity, however, was that it 
was likely to bring the venture under the notice of the Duke of York, 
since it might be contended that his monopoly was infringed. This 
monopoly, too, was not so much important on its financial, as on its 
political side. The control of the public correspondence was regarded 
as an important asset in maintaining the position of any party or 
interest in the State, and, since the Penny Post began its career at a 
time when public opinion was excited by rumours of Popish Plots, it 
was perhaps not unnatural that the opponents of the company should 
point to the encouragement its service gave to correspondence regarded 
as treasonable^ nor that the Duke of York might be tempted to seize 
the undertaking in order to obtain control of the local correspondence of 
London. Whatever may have been the cause, an action was brought 

1 Smith's Currant Intelligence, No. 15, March 30, 1680. For the first project cf. 
The Century of Inventions, by the Marquis of Worcester, 1663, No. 15, in The Life 
of the Second Marquis of Worcester, by Henry Dircks, 1865, pp. 407-8 ; Anderson, 
Annals of Commerce, in. p. 73. The second project may be that of M. Lewis. Cf. 
Proposals., for a large Model of a Bank, 1678, Brit. Mus. 1139. f. 19. 

2 The True News or Mercurius Anglicus, No. 37, March 24, 1680 ; Smith's Currant 
Intelligence, No. 15, March 30, 1680. 

' Smith's Currant Intelligence, No. 14; Mercurius Civicus,'No. 12, April 27, 1680. 

* Mercurius Civicus, Nos. 6, 12, April 6, 27, 1680. 

^ Ibid., Nos. 1, 2, March 22, 24, 1680. 

« A Penny Well-Bestowed, or a Brief Account of the new Design, Contrived for the 
ffreat Increase of Trade and Correspondence, 1680, Guildhall Library. 

' The True Domestick Intelligence, No. 79, April 2, 1680 ; Smith's Currant Intelli- 
gence, No. 15, March 30 ; Mercurius Civicus, Nos. 3, 4, March 29, April 1, 1680 ; 
Heraclitus Ridens, March 1, Dec. 27, 1681. 


46 Undertaking of the Penny Post [div. vii. § 1 

against the company as infringing the rights of the General Post Office. 
It is probable that very soon after the scheme was advertized legal proceed- 
ings were threatened and one suit was heard before the end of March 1681 ^ 
The combined effects of the dread of a powerful opponent and the 
continual drain of the payments necessary, on the part of the shareholders, 
to meet the weekly bill for wages had frightened many, who abandoned 
their shares and withdrew from the company. Murray, though not 
deterred by these causes (since he set up a rival post-office in Wood 
St.)'^, also retired from the partnership^, and Dockwra alone remained. 
The date of the dissolution of the first penny-post company can be fixed 
within certain limits as follows. The history of the first year of the 
enterprize is described very fully by De Laune on the authority of one 
of "the gentlemen concerned" (who was certainly Dockwra). In this 
account it is said that the undertaking was " little more than a year old.''^ 
Since it began on March 25th, 1680, De Laune's account must have been 
written about April 1681 ^ At this time a second company had come 
into existence which probably began business on Lady-Day, 1681. 
Dockwra, according to De Laune, had carried on the post at his sole 
charge "for above half a year." Taking Dockwra''s period of sole- 
proprietorship at seven or eight months, this leaves four or five months 
as the duration of the first company, which would thus have been 
dissolved in July or August 1680. There are no very definite particulars 
of the loss made by the first company. The charge for the first year is 
given in general terms as being " some thousands of pounds''," and the 
bulk of this would fall within the earlier months, at which time it seems 
probable that the receipts were, on an average, less than half the out- 
goings. On the basis of the results achieved by Dockwra in the next 
seven or eight months, it may be estimated that the loss of the first 
company would be close on ^2,000 ^ 

1 The Present State of London, by Thomas De Laune, 1681, p. 350. 

2 Maguire, William Dockwra, ut supra — Gibbons Monthly Journal, xviii. p. 68. 

3 Dockwra stated publicly that certain articles of co-partnership between himself 
and Murray (presumably those for the undertaking of the penny post) liad been 
*' sacredly kept on his part, but never performed by Murray." Daily Courant, No. 
229, Jan. 11, 1703. 

* This date is confirmed by the fact that De Laune speaks of the future appear- 
ance of a small tract. This was evidently The Practical Method of the Penny Post, 
the MS. of which possibly formed the basis of his account. Now on March 29th, 
1681, it was announced that this pamphlet would appear " in a few days" — " Advice 
from the Undertakers of the Penny Post," in The Protestant Domestic Intelligence, 
No. 109. 

5 The Practical Method of the Penny Post, 1681, Brit. Mus. 8245. g.Q (reprinted 
in The Stamp Collector, ix. pp. 47, 98, 99, 113-16). 

8 Taking the duration of the company at 20 weeks, the expenses at £160 a week 
and the average receipts at f of the expenses : vide infra, p. 47. 

Div. vn. § 1] Income and Expenditure 1680-1 47 

Dockwra, being left to carry on the enterprize at his own risk, 
devoted his whole time to it\ He complained of the rival scheme of 
Murray as being a great discouragement of his invention I While, even 
at a later date, he found some houses " so sottish as not to take letters in 
even gratis," and he recommends a correspondent " to cast no more of 
your pearls before such swine^" Some, if not all, of the expense of the 
costly law-suit with the Duke of York had to be borne by Dockwra, but 
as against this outlay it was thought in 1681 that the legal position of 
the Post had been established^. The revenue was increasing, though, 
after the undertaking had been six months in Dockwra's hands, it did 
not as yet suffice to answer three-quarters of the expenses. It is possible 
to make some attempt to reconstruct the financial position of the post at 
this time, on the basis of a number of statements made at a later date by 
Dockwra"*. While these apparently differ in the total sum, which he 
alleges he lost by the undertaking •*, they all agree in stating that the 
money he found, together with interest at 6 per cent, to 1690, amounted 
to d^4,400. It follows that the capital sunk by him would be £%60(i. 
By far the greater part of this outlay would have been incurred during 
the period he was sole proprietor, and therefore, it may be inferred, that 
as much as =^2,000 is to be assigned to this period. Further, it is 
recorded that, at the end of that time, the revenue was barely three- 
quarters of the charges''; and, if it be assumed that Dockwra was sole 
owner for 32 weeks, it is probable that at the beginning of this interval 
the proportion would be about one-half. It follows then that the ratio 
of income to expenditure may be averaged at five-eighths from the middle 
of August 1680 to Lady -Day 1681, and therefore the total expenses per 
week would have been approximately ^166^. To a certain extent this 
calculation can be verified from other sources. It has been estimated 
that the staff employed by the Penny Post numbered 300 persons'. 
About this time the wages, paid by the General Post, varied from 10*. 

1 A True State of the Hard Case of Wm Dockwra that set up the Penny Post in 
1680 and which the late King James ravisht from him : Treasury Papers, xliv. 56. 

2 De Laune, The Present State of London, p. 350. 

3 Letter of WiUiam Dockwra, ^^ Author of the Penny Post," to John Houghton, 
25th April, 1698 ; [Brit. Mus.], Stowe MS., 747 . f. 93. 

* De Laune, The Present State of London, p. 350. 

5 Treasury Papers, xliv. 56, lxxx. 55 ; Journals of the House of Commons, x. 
pp. 226, 384. 

8 To this amount Dockwra adds £4,000, as representing the salary he should 
have received and, in petitions after 1690, interest to date. He deducts " the present 
value" of his pension and the salary he received as comptroller. 

7 De Laune, The Present State of London, p. 350. 

8 I.e. Expenses £5,330, Receipts £3,330(|): Loss £2,000(|). 

* Maguire, William Dockwra — Gibbons Monthly Journal, xviii. p. 17. 

48 Undertaking of the Penny Post [div. vn. § 1 

to Qs. a week\ If Dockwra paid his people on an average 8*. a week, his 
wages bill would be £1^0 a week, in addition to which he would have 
to pay something to the tenants of the receiving-houses, provide for 
compensation for lost parcels, as well as for law-costs and for the 
remaining incidental expenses. Thus it is not improbable that his 
whole weekly outlay would have been between £\50 and ^^175. 

In March 1681 Dockwra had sunk more than ^£^2,000 in the post^ 
and he had brought it to a point at which it was likely a profit 
would soon be earned. His circumstances were such that he could not 
continue to provide the deficiency, that still had to be found, as he was 
already largely in debt^ Since the prospects for the future were pro- 
mising, he was able to form a new company, being joined by several 
partners " who were all natives and free citizens of London ^.'''' There is 
no information as to the arrangement made between Dockwra and those 
who united with him. Having spent so much on the venture, it would 
be disadvantageous for him to share the prospective profits with othei*s, 
unless the new members on their part paid him a sufficient amount to 
cover a portion of the cost of establishing the business. This method 
was adopted in other cases ; but, at the same time, it is to be remembered 
that Dockwra was in difficulties, and he may have been forced to admit 
the new shareholders, on condition that they would each provide a pro- 
portionate share of the weekly deficit but without paying anything 
towards such goodwill as had been established. 

The new company described itself as William Dockwra a7id the rest 
of the Undertakers of the Penny Post, and, judging by the efforts made 
to effect improvements and to draw public attention to their service, the 
date of the transfer may be fixed as having been on or about the first 
anniversary of the establishing of the post, namely March 25th, 1681. 
The deliveries were augmented and quickened. It was now announced 
that the average time occupied by a letter in transit, within the Bills of 
Mortality, should have been three hours. To meet the complaints of 
delay, a system of post-marks was invented, which showed the hour at 
which a letter had been received at some one of the sorting-depots*. 
Evidently there had been both bogus and excessive claims on account 
of lost parcels, and it was now stipulated that compensation was not 

1 The Post in Grant and Farm, by J. Wilson Hyde, London, 1894, pp. 297-8. 

2 I.e. £2,000 during the time he was sole proprietor and his proportion, as a 
shareholder, of the previous loss which was altogether of about an equal amount. 

3 Journals of the House of Commons, x. p. 384. 

* De Laune, The Present State of London, p. 350 ; The Practical Method of the 
Penny Post, ut supra. 

^ These are reproduced in Joyce, History of the Post Office, p. 38; Gibbon's 
Monthly Journal, xviii. p. 67. 

Div. VII. § 1] Attacked by the General Post 1682 49 

recoverable, unless the packet was securely sealed and the nature of the 
contents endorsed on it\ 

Signs are not wanting that, as both the public and the letter-carriers 
became acquainted with the conditions of an expeditious service, the 
Penny Post became increasingly popular. It is probable that, before 
the end of the year, some small profit was being made. It was soon 
found that the new postal facilities had made possible new methods of 
business. Thus, when in April 1682 it was proposed to float a new 
subscription of East India stock of 3 millions, it is noticed that the 
post was used to reach persons who were thought likely to become 
adventurers 2. 

By 1682 the undertaking was yielding a profit, and the farmers of 
the General Post again took action against the London enterprize. 
Proceedings were begun by Lord Arlington, and the case was heard 
in Michaelmas term at the King's Bench in 1682. It was claimed that 
the Penny Post was an invasion of the monopoly of the conveyance of 
letters, settled on the Duke of York, and £%bQ(} was sought as 
damages, besides .^'lOO per week as the receipts of the undertaking in 
the Westminster district. It was argued on behalf of the company that, 
in cases where in any town no local post had been established, the 
monopoly did not apply and such enterprize might be lawfully carried 
on by private individuals. On behalf of the Postmaster-General it was 
pleaded that such possible exception only held good in places, which 
were not reached by the routes of the General Post, and that, since this 
was admittedly not so in London, the company had invaded the mono- 
poly. By the verdict of the Court the company was exempted from the 
damages claimed but was fined £100 for contempt of courts 

The decision of the King's Bench was announced in the last days of 
November 1682 and the company was in an exceedingly difficult position. 
At this time, it is related that the post " had been brought to good per- 
fection and began to bring in a small profit '' towards the reimbursement 
of former losses " with hopes of future recompense*.'' It is possible that 
those shareholders, who had joined the second company, may have been 
receiving an income on their investment, but it is clear that Dockwra 

1 The Protestant {Domestick) Intelligence or News Both from City and Country, No. 
109, March 29, 1681 ; Smith's Protestant Intelligence, No. 19, March 31, 1681 ; The 
Practical Method of the Penny Post, ut supra. 

2 London Mercury, No. 4, April 20, 1682. With reference to this proposed issue 
of East India stock, vide supra, ii. p. 143. 

3 State Papers, King's Bench, coram Rege, Roll 2023, mem. 24— Hulkes v. 
Wm. Dockwra. 

4 Journals of the House of Commons, x. p. 226. It may be noted that in this case 
(as elsewhere, when Dockwra .says the Post was "set up at his sole charge") he 
assumes that the whole loss was his. 

s. c. III. * 

50 Undertahing of the Penny Post [div. vii. § 1 — 

himself could not, as yet, have obtained enough to make any great . 
reduction in his loss as sole proprietor and as a partner in the first 

The members of the undertaking doubtless feared that such profits, 
as were being made, might be swallowed up in law costs and damages. 
By November 27th the General Post Office, in advertizing the decision 
of the King's Bench, gave notice that it would " forthwith *" establish a 
penny post and would employ those " lately '' in the service of the com- 
pany^, whence it is to be inferred that at this date Dockwra''s organization i 
had suspended its service. The revived delivery of letters at a charge of ^ 
Id, within the specified area, was announced to begin on December llth^, 
and this event involved the frustration of the last hopes of the 

Since the enterprize was taken over by the General Post Office without 
any compensation being paid to the shareholders, it is likely that the 
second company, like the first, sustained some loss. For a time after the 
shareholders in this body had joined it, they had to meet the losses on 
the service, but towards the end of its existence a profit was being 
made. But, in so far as the whole nett revenue of the Penny Post 
from March 25th, 1686, to March 25th, 1687, was under <^800, it is 
obvious that any balance of profit in 1682 over the losses from March 
1681 can only have been very small. Further, from this must be 
deducted the expense of the law-suit in 1682, so that on the whole 
the second penny post company was probably not profitable as an 
investment. Such however was not the judgment of some of those 
living at the time. In 1698 this undertaking was one of those men- 
tioned, in conjunction with the New River and Hudson's Bay enterprizes, 
in which the adventurers had made large profits^. In so far as there is 
any foundation for this statement it may be based on the pension granted 
to Dockwra personally of ^^500 annually for ten years, in addition to 
which he received a salary as comptroller of the Penny Post, and, after 
he was dismissed from this office, the promise of other employment under 
the State. His own account of the financial results of his connection 
with the Penny Post up to 1697 was that his loss and interest thereon at 
6 per cent, up to 1690 was i^4,400 ; to this he added ^4,000 to cover the 
time he had devoted to planning and managing the undertaking for 
three years from the end of 1679 to 1682 and also the expense of 

1 Lmdm Gazette, No. 1776, Nov. 27, 1682. 

2 lUd,, No. 1779, Dec. 7, 1682. 

3 A True Copy of Several Affidavits and other Proofs of the Largeness and Richness 

qfthe Mines of the late Sir Carh&ry Price Brit. Mus. '^-'^ 


DiY. VII. § 1] Financial Results 51 

re-establishing his business connection for a year afterwards. This made 
.5^8,400, from which he deducted the capitalized value of his pension, 
which he placed at <^2,400, making his loss, to 1690, i^6,000. There 
was still to be added interest on the balance from 1690 to 1697, which 
was placed at J'2,500, giving a total nett loss, according to this mode of 
statement, of ^8,500\ 

1 Treasury Papers, xliv. 56. 



The Proprietors of the Convex Lights or the Partners 

IN THE Convex Lights (1684-1744). 
The Proprietors of the Light Royal (1687-94). 
The Proprietors of the Glass Globe Lights (1692-3). 

The civic authorities in London had made efforts from time to time 
to secure the lighting of the streets. As early as 1599 an order was 
made by the Common Council that householders should hang from their 
dwellings " a good substantial Ian thorn and candle " between October 1st 
and March Ist^ After the rebuilding of London in the reign of 
Charles II., there was a tendency to improve the state of the thorough- 
fares, chiefly with a view to the prevention of murders and robberies. 
Means to give effect to this improvement were found in the enterprize of 
individuals, who were willing to contract with householders to light and 
extinguish the lanterns required by the City Council. Thus in 1682 a 
group of persons, who described themselves as the Proprietors Jbr the 
Lights, advertized that they were prepared to perform this service^. As 
yet, however, nothing of the nature of a street-lamp had been invented. 
Samuel Hutchinson claimed the distinction of having discovered a method 
for " the great and durable increase of light by extraordinary glasses and 
lamps, very useful for... ship's lanterns, lighthouses and dispersing of light 
in mines and other necessary and like profitable uses^." Hutchinson was 
in pecuniary difficulties, and he arranged that a patent should be applied 
for by Edward Windus. This grant, which was signed on February 27th, 
1684, conferred the sole right of using this invention, in England and 
Wales for the ensuing fourteen years, on the patentee, his assigns and 
those duly authorized by him. 

Hutchinson's method of increasing the efficiency of light consisted in 
the use of convex reflectors, which were probably of glass, and therefore 
his system was known as the " convex lights '"' or " convex glasses." It 

1 Minutes of the Common Council^ Guildhall Library, xxv. f. 98. 

2 Domestic Intelligence, No. 132, Aug. 24 to 28, 1682. 

3 Patent Roll, 36 Charles II., Pt. 6, No. 23. 

Div. vn. § 2] The Convex Lights Company 1684-94 53 

soon appeared that there was scope for the improved scheme of street- 
lighting, and there were ample indications that many householders would 
be willing to pay a small sum annually to Hutchinson, provided he 
undertook to supply and maintain lamps of the new type, besides lighting 
and extinguishing them. At this stage the enterprize entered on a new 
phase, for which some capital was required to provide the necessary 
materials, as well as a system for organizing the work of the lamp- 
lighters. Hutchinson himself was without resources and he was joined 
by others, who furnished the necessary funds. At first the undertaking 
was divided into four parts, and one of the original partners, John Reeve, 
found it incumbent on him to take proceedings in Chancery to obtain a 
title to his share in the business. It was not long before sales of sub- 
divisions of the original quarter-interests were made, and eventually an 
arrangement was effected, by which the benefit of the patent was regarded 
as divided into 32 shares \ Of these Hutchinson owned 12 up to 1692, 
when he was forced to raise money by mortgaging two of them, leaving 
him with power of disposition over 10 shares ^ The average amount, that 
he had received for the 22 shares which had passed out of his possession, 
was c£^29 per shared It seems probable that the whole calls ordered, 
until some time after the Revolution, were £1^0 per share, which would 
make the paid up capital at that time over ^^5,000. There is one element 
of uncertainty in this calculation. It is based on the fact that the total 
amount called up on each share in 1695 was ^£^800. Through certain 
circumstances to be detailed below ^, Roman Russell became possessed of 
a share early in 1694, and he complained that the amount he had to 
" reimburse "" the company, as calls, came to c£'640. This share had been 
transferred by Hutchinson out of the two he had mortgaged, and it may 
have been that some of the calls, due on it at the time it was handed over, 
had not been paid. If this were so the capital called up by 1690-1 would 
be proportionately larger than ^5,000. 

Just when the company was beginning to succeed, it found itself faced 
by the competition of Edmund Hemming, who had invented another type 
of street-lantern, which he named the " Light Royal.'' This scheme is 
said to have been in operation in 1687^ and Hemming applied to the 

1 Hist. MSS. Com.— The Manuscripts of the House of Lords, 1693-5, i. p. 373. 

2 Chuiicery Proceedings, Mitford \^^.—The Severall Answers of Samuel 
Hutchinson Gent, one of the defendants to the bill of Arthur Moore Esq. and 
Roman Russell Gent. 

3 The Manuscripts of the House of Lords, 1693-5, i, p. 544. It thus appears that 
the figure 22 in the MS. is correct and the suggested emendation to 32 in the Calendar 
is not required. 

* Vide infra, p. 58. 

^ London and the Kingdom, by Reginald R. Sharpe, London, 1894, ii. p. 582 

54 Street- Lighting Companies [div. vii. § 2 

City Council for encouragement on October 15th, 1689\ At this time 
the position of what was known as the Orphans'* Fund had become most 
unsatisfactory, and the situation, which had arisen, eventually affected 
the finances of both street-lighting and water-supply undertakings^ This 
fund had been established for the supervision and administration of estates, 
bequeathed to minors. At the Revolution it had been found impossible 
to pay the claims of the beneficiaries, and, as the result of an investiga- 
tion, made in 1689, it was discovered that the deficiency was about 
d£^500,000^. The default was assigned to the loss of interest on monies 
lent to the Crown at the time of the stop of the Exchequer in 1672, but 
the full explanation depended on other events both of an earlier and also 
of a later date. As early as 1642 the Orphans' Fund had been drawn 
upon not only to provide a part of the contributions demanded from the 
City at that time, but also, it was alleged, in the case of Major-General 
Skipton, to furnish a pension of d£*300 a year^ It was said that payments, 
from the fund to one applicant, were made out of the resources lodged 
on behalf of others, who could not claim their principal until a later date, 
and no doubt the insecurity of the fund was accentuated by the financial 
expedients adopted by Charles II. in 1672. The last shock to the credit 
of the Chamber came from its excursion into banking in 1681 and the 
large withdrawals made in 1683, during the crisis of that year^ The 
result of these successive adverse influences was that, in 1689, neither 
principal nor interest could be paid to the Orphans^. Defoe describes 
how the treasury of a great city " was shut up and forty thousand 
orphans turned adrift in the world, some with no cloaths, some no 
shoes, some no money ; and still the city magistrates calling upon other 
orphans to pay their money in. These things put me in mind of the 
prophet Ezekiel and methoughts I heard the same voice that spoke to 
him calling me and telling me, 'Come hither and I will show you greater 
abominations than theses'""' It remained for the City to obtain the 
assistance of Parliament, in working out a scheme, which would meet 
some of the liabilities that had matured. The fact that there was 
competition in street-lighting suggested that a part of the revenue 

^ Minutes of Common Council^ li. f. 12 b. 

* Cf. supra, pp. 12, 33. 

3 Sharpe, London and the Kingdom, ii. p. 545. 

* A Letter from Mercurius Civicus to Mercurius Rusticus : Or London's Confession, 
hut not Repentance, by Samuel Butler, 1643 (Somers' Tracts, 1750, v. p. 411). 

* A Dialogue between Franciso and Aurelia, two unfortunate Orphans of the City of 
London, 1690 (Harleian Miscellany, 1745, iv. p. 656). 

" England's Calamities Discovered, by James Whiston, 1696, in Harleian Miscellany, 
VI. p. 339. 

7 The Consolidator or Memoirs of Sundry Transactions from the World in the Moon, 
London, 1705, p. 75. 

Div. viT. § 2] The Light Royal Company 1687-92 55 

required might be obtained, by letting out the contract for this service 
at a rent which could be devoted towards satisfying the claims of the 
Orphans. In 1690 the Corporation repeated its former orders, requiring 
householders to hang out lamps after dark from Michaelmas to Lady-Day 
up till midnights Hemming had assumed partners for the development 
of his invention and the company described itself as the Proprietors of the 
Light Royal. This syndicate claimed that its lantern was superior to 
that supplied by the Convex Lights company, in so far as it cast fewer 
dark shadows. The terms made with householders were that, in con- 
sideration of a fine of 5s. and an annual payment of a like amount, the 
lighting company undertook to discharge the obligation, imposed by the 
by-law of the Corporation, during the lighting-hours specified. As lamps 
need not be lit on moonlight nights, the contract applied to 120 nights, 
the charge for which, according to the proposals of the Light Royal, was 
\d. per night for the first year, and ^d. per night for each of the four 
subsequent years 2. 

On September 6th, 1692, the proprietors of the Light Royal had 
submitted proposals to the Common Council, stating that they were 
prepared to supply lights at the current rates, consisting " of one entire 
body of glass, giving light all round about and underneath, without any 
darks or shades."" The proposed lanterns were to have an inscription on 
them of the word " Orphans,"" and the promoters were prepared to pay 
one-half of the clear profit to the Orphans' Fund. The company professed 
itself so convinced of the advantages of its light that it asked no modifi- 
cation of the existing regulations, only requiring that the Mayor and 
Common Council should encourage the use of the lamp in London and 
they were asked to aid in its adoption in the provinces, where it was 
proposed the lights should be lettered "Disabled Seamen,'"* a "great 
part'"* of the provincial profits being intended to be devoted towards 
the erecting of a naval hospitaP. 

Another offer came from the Glass Globe Lights. These lamps were 
to be set on posts, 10 feet above the ground, so that there should be "no 
dark shadows whatsoever but that the light shall be always clear and 

1 A History of Inventions , by John Beckmann_, 1846, ii. pp. 178, 179. 

2 AnglicB Metropolis, 1690, p. 365. In January 1693 the Proprietors of the Light 
Royal advertized that " they had set up lights pursuant on the order of the Lord 
Mayor on the Exchange and Cornhill," and, " whereas several of them had been 
shot by bullets," a reward of £5 was offered for information which would lead to 
the discovery of those who had fired the shots. London Gazette, No. 2839, Jan. 
23, 1693. 

3 Minutes of Common Council, li. f. 188 ; Proposals humbly offered for the better 

lighting of all the Streets, Lanes, Allies and Public Courts within the City of London and 

r . ^^ 816.m.9~l 
the Liberties thereunto belonging Brit. Mus. ^ • 

56 Street-Lighting Companies [div. vii. 


equally dispersed... delightful and useful to passengers, without glaring 
or dazzling the eye.*" The illuminant was to be rape-oil, with a cotton 
wick, and it was provided that the glasses should be cleaned every night, 
and the wicks snuffed as often as required. The charge for street-lamps 
was to be 6s. per annum, for those in schools, churches, halls, 8*. The 
rent of c£*800 a year was offered, provided that the City prohibited the 
use of any other lights during the currency of the proposed grants The 
latter condition could not be complied with, since the patent for the 
Convex Lights was not due to determine till 1698, and nothing more is 
heard of the Glass Globe company in these negotiations. The struggle 
lay between the Light Royal and the Convex Light companies, and it 
was announced on November 6th, 1693, that "new and advantageous 
proposals had been received 2. " The Convex Lights company had been 
somewhat slower than its opponents in tendering. Hutchinson, the 
inventor, who was still a large shareholder, took the attitude that he was 
entitled to enjoy the benefit of his patent for the residue of the term and 
that the imposition of a rent was, in effect, to deprive him and his fellow- 
shareholders of a portion of that benefit ^ There was however a difference 
of opinion within the company. During the boom in the stock and share 
market, there had been fairly numerous sales of shares in this undertaking, 
which had changed hands at prices between £\fiOO and <i^l,500, repre- 
senting a substantial premium on the sums called up, possibly as much 
as 100 per cent."* Persons who had bought at a high price were only 
exercising ordinary prudence, in endeavouring to effect some arrangement 
which would secure the good will of the Corporation, before the patent 
had determined. Moved by these considerations, it was decided by a 
majority to offer a rent of <^600 a year for a contract of 21 years. This 
offer was considered by the Common Council on November 24th, 1693°, 
while, on December 13th, the Light Royal presented an amended pro- 
posal which now took the form of a rent of ^"'1,000 a year, provided that 
an act of Parliament or of Common Council was obtained " for raising 
the yearly sum of .£'^3,000 from the inhabitants " of places which were 
improved by the lighting". The proposition from the Convex Lights 
company was clearly the more favourable, and it had the advantage of 
the personal advocacy of thirteen prominent merchants (including mem- 
bers of the Houblon family), who appeared before the Committee. On 
a division, therefore, the contract was assigned to the Convex Lights 

^ Proposals about Lights for this City Brit. Mus. —^ — . 

2 Minutes of Common Council, li. f. 281. 

^ Journals of the House of Commons, xi. p. 116. 

^ The Manuscripts of the House of Lords, 1693-5, i- PP' 541-5. 

^ Minutes of Common Council, li. f. 282 b. 

8 lUd., LI. f. 284. 

Div. TIL § 2] A Concession sought from the City 1692 57 

company, subject to the assent of Parliament. The obtaining of such 
assent was subject to two special difficulties — the one affecting the bill as 
a whole, the other relating to the lighting clause only. The City had 
promoted an Orphans' Bill in each session since 1691, only to discover 
that " the cart was bewitched " ; because, " hitherto, they had sneakingly 
with-holden the wonder-working guineas." There was a consensus of 
opinion that the adverse spell must be lifted during the proceedings of 
1694, and the Corporation on January 24th had authorized the Chamber- 
lain to make such payments, as were required, in soliciting Parliament ; 
while the Orphans, on their part, undertook to pay certain agents 5 per 
cent, of the monies they received, on the bill being passed. A sum of 
1,000 guineas was subsequently traced to Sir John Trevor, the Speaker, 
and he was expelled from the Housed The main difficulty having been 
surmounted, there remained a minor one, which it was feared at one time 
would wreck the bill. Hutchinson, together with Arthur Moore who was 
the mortgagor of two shares belonging to the former, had refused to 
assent to the agreement with the City. As dissentient shareholders, 
they prepared a petition, which was drawn up in the name of Hutchinson, 
asking for a saving clause in favour of the inventor and requiring certain 
concessions from the other partners 2. This petition was presented on 
March 3rd, 1694, but the House was not satisfied as to the bona fides of 
Hutchinson and Moore, and it was resolved on March 8th, by 138 votes 
to 59, that his name should not be included amongst those mentioned in 
the bill, as partners in the Convex Lights. The claim of Moore was dealt 
with similarly ^ The Light Royal company also opposed this clause, 
contending that the claim made on behalf of the Convex Lights, that 
many thousands of pounds had been spent in developing the enterprize, 
was misleading, in so far as the greater part of such outlay had been 
partly on stock-jobbing the shares, partly on buying up competitive 
lighting undertakings. It was also alleged that the Light Royal was 
superior, inasmuch as it would be cheaper to the people and " did not 
drop oil to the annoyance of any-body*."" It was possibly in connection 
with the former complaint that, on March 25th, the secretary was ordered 
to attend with the books ; but, the bill being hurried forward, there is 
no record of the investigation having been made''. Hutchinson's opposi- 

^ A Collection of the Debates and Proceedings in Parliament in 1694 and 1695 upon 
the Inquiry into the Late Briberies and Corrupt Practices, London, 1695, pp. 11, 12, 16 ; 
A Supplement to the Collection of Debates... upon the Inquiry into the Late Briberies, 
London, 1695, p. 93. 

2 Journals of the Hou^e of Commons, xi. p. 116. ^ Ibid., p. 122. 

* Reasons humbly offered against the Bill for the sole use of Convex Lights or Glasses 

Td : AT 816 . m . 13"| 
I Brit. Mus. -^ J. 

^ Journals of the House of Commons, xi. p. 281. 

58 Street-Lighting Companies [div. vii. § 2 

tion was not yet at an end. He was advised that it was necessary to 
gratify some person, having influence, so that his case should be considered 
in the House of Lords K Accordingly, on March 15th he executed an 
assignment, authorizing Moore to dispose of one of his shares, with a 
view to promoting his interest in Parliaments This share was transferred 
to Roman Russell, who had influence with the Marquis of Normanby. 
Hutchinson's petition was presented on the 17th, and his counsel was 
heard on the 20th S Suddenly the clause relating to the Convex Lights 
acquired such importance that it was thought the fate of the whole 
measure depended on it. If the opposition was continued, it could be 
represented that the company was not unanimous and, therefore, the 
rent might not be secure. There was an excited body of persons, in the 
vicinity of the House, consisting of the orphans, their agents, some of the 
shareholders in the company and Hutchinson's friends. Normanby came 
to them and declared that, unless the other shareholders came to terms 
with Hutchinson, the whole bill would be lost. This statement increased 
the perturbation of the orphans, who brought great pressure to bear on 
the members of the company who were present. These deposed after- 
wards that a reluctant consent was wrung from them by the fear of 
violence. One of them, John Lilley, said that he was constrained to 
sign owing to the orphans "pulling him and threatening him." Sir 
Thomas Millington was " tossed about "" by the crowd, till he, too, 
assented^. Immediately this settlement had been made, the bill pro- 
ceeded swiftly, and it received the Royal Assent on March 23rd ^ The 
clause, in its final form, was a confirmation of the lease made by the City 
to the company for 21 years from June 24th, 1694, at the agreed upon 
rent of £Q00 a year^. This measure was defined by an act of Common 
Council, dated October 25th, 1695, which recapitulates the agreement 
already reached and confirmed by Parliament in the previous year. This 
covered the sole use "of all public lights in public places, within the City 
and liberties " for the term of 21 years. Further, the former orders com- 
pelling householders, whose dwellings fronted on any public thoroughfare, 
to light the roadway, were repeated. The penalty of 1*. for each default 
was to be exacted, unless those liable had agreed with the proprietors of 
the Convex Lights to install and tend the necessary lamps''. 

This act was the last step required to secure the legal position of the 
company; and, in anticipation of obtaining such authorization, steps had 

1 The Manuscripts of the House of Lords, 1693-5, i. p. 541. 

2 Journals of the House of Lords, xv. p. 547. 

3 The Manuscripts of the House of Lords, 1693-5, i. pp. 372, 373. 

4 Ibid., pp. 544-5. 5 lUd., p. 372. 

6 5 and 6 Will, and Mary, c. x., § 4 ; Statutes, vi. pp. 464, 465. 
^ Lane Mayor — Commune Condi' tent' in Camera Gnildhald' Civitat' London ...An 
Act of Common Council for Lighting the Streets [Brit. Mus. 1881 . b . 3 (9)]. 


Div. vn. § 2] Peers, Orphans and the Company 1695 59 

been taken to make the resources of the undertaking adequate to the en- 
larged field of its operations. Early in 1695, i^800 per share had been 
called up. Thus the nominal capital was .£25,600 and this large sum 
(in relation to the nature of the business carried on) lends some colour to 
the allegations of the Light Royal that money was spent in buying up 
competing concerns. About the same time the number of shares was 
doubled and these, in the new denomination, sold at £^^^^. This price 
was equivalent to par ; so that, as stated by the writer oi AngVwe Tutamen, 
several shareholders had lost considerably 2. 

It was scarcely to be expected that the majority of the company 
would abstain from attempting to exact retribution from Hutchinson, 
Moore and Russell. Possibly the excuse for retaliation was to be found 
in the inability of some of them to pay the recent calls on their shares. 
According to Russell's own testimony, as much as X^640 was due from 
him for calls on the single share he had acquired. However this may 
have been, the company refused to recognize these three as members. 
They were not consulted at the time of the doubling of the shares, nor 
were the accounts or documents submitted to their perusaP. It was 
found necessary to institute proceedings in Chancery early in 1695. 
When the bills, answers and cross-bills came to be filed, it was dis- 
covered that the important fact had been divulged that Russell acquired 
his share without giving any valuable consideration for it. Indeed 
it was deposed that this share had been transferred in order that 
" Hutchinson's interest in Parliament should be advanced ^'^ On this 
statement being communicated to the House of Lords, the Peers decided 
on March 25th, 1695, to institute an inquiry ^ Numerous witnesses 
were called and examined on March 29th, April 1st, 8th and 9th. It 
soon became apparent that Normanby was the peer whom Russell had 
been induced to influence, and the investigation was merged in another, 
which was examining the alleged too favourable terms, on which the 
former had obtained the lease of a piece of ground from the City^ On 
April 18th it was carried by a majority that "there was no just cause of 
censure on the Marquis of Normanby," but at the same time there was 
a powerful minority which entered a protest, contending that it was " an 
extraordinary offence for a peer to deliver an opinion without doors,"" as 
to the fate of a measure which was then pending ^ There is no evidence 
to show whether the dispute within the company proceeded further. 

1 The Manuscripts of the House of Lords , 1693-5, i. pp. 543-5. ^ p. 31. 

3 Chancery Proceedings, Mitford ^jV-, June 11, 1695.— ''The Severall Answers 
of Samuel Hutchinson." 

* Ibid. ; Journals of the House of Lords, xv. p. 547. 

6 Journals of the House of Lords, xv. p. 527. ^ I^id., p. 546. 

7 Ibid., p. 557. The protesting Lords record that they helieved the share, assigned 
to Russell, to have heen worth £2,000. ITiis appears to be due to a misinterpreta- 

60 Street-Lighting Companies [div. vii. 

After some conclusion had been reached, as between Hutchinson \ 
his supporters on the one side and the remaining members of the company 
on the other, attention was given to the development of the business/ 
It is not improbable that this company bought out the owners of 
the Light Royal, since Samuel Garret, who had been a supporter of 
Hemming''s invention as one of the proprietors in 1693, appeared at a 
later date as a shareholder in the Convex Lights \ 

Contemporary writers, at the beginning of the eighteenth century, 
spoke of the light with a considerable amount of satisfaction. Guy 
Miege described London as " being singular in the use of the Convex 
Lights, commonly called lamps. Which give a great and extensive light 
and are very convenient to prevent murders and other outrages, so 
frequent in great and populous cities beyond sea'^." About this time 
the office of the company was situated at the White-Hart on the East 
side of Bread Street^, and the charge for a single lamp, outside a private 
house, was 6^. a year^ By 1713 the rent had fallen into arrear', and on 
June 19th, 1716, it was agreed that a new lease should be executed at 
d£*400 a year, to date from Midsummer 1715^. On December 15th of 
the same year it was determined that the acts, governing the lighting of 
the streets, should be printed and circulated at the cost of the company ^ 
In view of the determination of the lease in 1736, a committee was 
appointed on July 29th, 1731, to make enquiries and report as to the 
best manner and method of street-lighting ^ The result of this investi- 
gation was adverse to the Convex Lights company, whose methods were 
then described as being subject " to great defects."" The company replied 
that householders had lately contracted with diverse tin-men for the 
lighting of their premises, and that this practice had not only diminished 
the revenue of the undertaking but had also impaired the quality of the 
lighting". Though proposals were submitted by this body, as well as by 
a number of other undertakers, the corporation determined to change its 
contractors, and in 1744 it was remitted to the aldermen and council of 
each ward to let out the lighting, snuffing, cleansing, supplying, main- 
taining and repairing of the public lamps ; but the annual rate was now 
advanced to 38*.^" 

tion of the evidence. Moore said he had been oiFered £2,000 for his holding {The 
Manuscripts of the House of Lords, 1693-5, i. p. 545), but it will be remembered 
Moore had two shares mortgaged to him, only one of which he transferred to 

1 Minutes of Common Council, li. f. 284, lvii. f. 236. 

2 The Present State of Great Britain, 1707, i. p. 138. 

3 A New View of London, by Edward Hatton, 1708, p. 785. 
* Minutes of Common Council, lvi. f. 35. 

^ Ibid. « Ibid., f. 226. ^ j^d,^ f. 259. 

8 Ibid., LVII. f. 236. 9 Ibid., f. 348. lo Ibid,, lviii. f. 353. 





The manufacture of paper had been established in England as early 
as the reign of Elizabeth, if not before that time^ The industry increased, 
and a century later there were upwards of a hundred mills at work 2. Their 
output however was confined to the coarser kinds, such as brown paper, 
and it was necessary to import the finer qualities from abroad. In 
1673-4 the quantity of paper brought from France was 160,000 reams 
which, at the valuation of 5s. per ream, amounted to £4iO,000 annually^ ; 
while, later in the century, it was stated that the imports of this com- 
modity cost as much as ^100,000 a year^. It is said that the first 
attempt to produce the better kinds in England was due to E. Burnaby 
in 1678, but his enterprize resulted in failure ^ In 1682 a further effort 
was made to achieve success by George Hagar, who obtained a patent for 
the sole production of white writing and printing paper for 14 years by 
the method of " sizeing it in a mortar ^" A company was formed to work 
the invention, and ^"^6,000 was paid by a number of persons for shares^ 
A mill was erected at Ensham and others were leased elsewhere^ For 
some time a considerable trade was carried on, but Hagar's success came 
to the notice of those persons who had made him bankrupt in 1677 and 
these now attempted to make the funds of the company liable for his 
by-gone debts. The shareholders were indignant and accused Hagar of 
having obtained their money by means of fraud. It appears however that 

1 In A Spark of Friendship (1588), in Harleian Miscellany, iii. p. 249, it is noted 
that a paper-mill had been erected at Dartford by Spilman, the Queen's Jeweller, 
cf. Paper and Paper-making Chronology j London, 1875, p. 20. 

2 Reports Hist. MSS. Com.— The Manuscnpts of the House of Lords, 1690-1, xxii., 
Pt. v., p. 76. 

3 A Scheme of the Trade as it is at present carried on between England and France, 
by Patience Ward, Thomas Papillon and others, 1674, in Somers TracU (1748), iv. 
p. 537* 

* Anderson, Annals of Commerce, in. p. 131. 
^ Paper and Paper-making Chronology, p. 20. 

6 Reports Hist. MSS. Com., xiii., Pt. v., p. 436. 

7 Ibid., p. 497. s Ibid., p. 496. 

64 The White Paper Makers' Company [div. viii. 


he had some knowledge of paper-making, since he was, at a later date, a 
frequent petitioner for encouragements There were several suits for the 
possession of the patent, which eventually remained in the hands of fl 
William Sutton, who made paper at the King's Mills, Bjfleet^. 

While matters were in this condition, John Briscoe had obtained 
the assistance of some Frenchmen, who instructed him in the secrets of 
the trade; and, on April 15th, 1685, he applied for a patent for 
"making, sizeing and whitening writing, printing and other paper^"" 
Having obtained his grant, a company was formed, including John 
Dunston, Nicholas Dupin, Adam de Cardonell, Henry Longueville and 
a number of others. On June 13th, 1686, a petition was presented, 
which stated that " a vast expense "" was necessary to carry on the manu- 
facture to advantage. It was pleaded that a capital outlay of ^£^100,000 
was required, " which sum, being so great, cannot be raised but by a 
considerable number of persons, incorporated and joining in a joint- 
stock."" It was also urged that, in spite of the patent, the company 
" laboured under great inconveniences, met with insupportable difficulties 
and ran great hazards '"" ; and, for these and other reasons, a charter of 
incorporation was asked ^ Accordingly, a grant was signed on July 3rd, 
1686, creating a "body politick" to be known as the Governor and 
Company of the White Paper Makers in England with powers to elect 
a governor, deputy-governor and assistants — the latter not to exceed 
23 in number. The governor and deputy-governor were to be present 
at all meetings for the making of orders. The shareholders were entitled 
to one vote for each share held. This charter confers on the company 
the sole right of making white writing and printing paper for the space 
of fourteen years from July 3rd, 1686, and its officials were entitled to 
break open doors of premises where they suspected paper, made in 
contravention of the patent, was stored, and to call on constables to 
assist them. The King promised to grant such further powers and 
privileges as should be necessary for the carrying on and improvement 
of the manufacture, and, in particular, to assent to any bill promoted by 
the company ^ Recourse was soon made to the royal protection ; and, 
on June 12th, 1687, the company petitioned that a fine of £500, imposed 
on Theodore Janssen at its prosecution, should be granted to it*. The 
same year a proclamation was issued " for establishing the manufacture 
of white paper,"*' which was designed to assist the company in discovering 

1 State Papers, Domestic, Petition Entry Book, xii. pp. 161, 451. 

2 Reports Hist. MSS. Com., xiii., Pt. v., p. 436. 

3 State Papers, Domestic, Petition Entry Book, lxxi. p. 127. 

* Ibid., Petition Entry Book, lxxi. p. 268; Ibid., James II., iii. 97. 
^ Ibid., James II., iii. 98 ; Ibid., H. O. Warrant Book, iv. p. 67. 
« Ibid., Petition Entry Book, lxxi. p. 351. 

Div. VIII. § 1] A Private Bill in Committee 1690 65 

those who were copying its processes ^ Obviously there was an incon- 
sistency between the privileges of this body and those previously granted 
to Hagar and which had been exercised by Sutton. The legal position 
of the latter was not strong, and the company succeeded in preventing 
him from making white paper^. 

On the signature of the patent, great energy was shown in developing 
the business. The capital was divided into 400 shares which were taken 
up, and c^50 per share was subscribed, making the whole sum paid (or 
credited as paid) 6^20,000^ No less than five mills were leased or 
purchased, and considerable quantities of paper made"*. On the 
outbreak of war with France after the Revolution, the importation of 
French paper was prohibited, and the company was in a position to take 
advantage of the wide field open to its enterprize. It soon found that 
more capital was needed, but there were doubts as to the validity of its 
charter. The governor and assistants decided that the boldest course 
was the most safe, and an appeal was made to Parliament for an act 
confirming the charter and authorizing an increase of capital. There 
was considerable opposition. William Sutton, the Dean and Chapter of 
Windsor and " the ancient paper-makers of the kingdom " all petitioned 
against the bill. On a conference between the parties, Sutton withdrew 
his petition, on condition that four of the original shares should be 
assigned him free of expense on the passing of the bill, and that further, 
whether it passed or not, the company was to rent his paper-mill, paying 
a fine of .£^100 and such rent as was fixed by arbitration ^ 

The bill was considered by a committee of the House of Lords on 
May 15th, 17th and 19th, 1690. The Dean of Windsor contended that 
the proposed legislation would lessen the value of the paper-mills belong- 
ing to the chapter. The ancient paper-makers were supported by the 
Mayor and aldermen of Chipping Wycombe. Counsel on their behalf 
argued that the confirmation of the company's charter by Parliament 
would be prejudicial to other paper-makers, "who could make good 
white printing paper,'' and it was asserted that many of these would be 
ruined, thereby becoming chargeable on the rates. The privileges asked 
for by the company were described as " a plain monopoly," under cover 
of which the whole supply of rags would be engrossed. 

To these arguments, counsel for the company replied by showmg 
that those opposing the bill were unable to produce fine white paper. 

^ Paper and Paper-making Chronology, p. 20. 

2 Reports Hist. MSS. Com., xiii., Pt. v.^ p. 436. 

3 MS. Act to encourage the manufacture of White Paper, 2 Will, and Mary, 
No. 25, House of Lords MSS. 

* Reports Hist. MSS. Com., xui., Pt. v., p. 76. 
6 Ibid., p. 436. 

s. C. III. ^ 

66 The White Paper Makers' Company [div. viii. § 1 

Attention was directed to the clause in the bill, which stated that the 
confirmation of the monopoly of the company only applied to such paper 
as was commonly sold at a price, exceeding 4*. per ream, and that the 
chartered undertaking was precluded from manufacturing any that 
realized that price or less. Thus the monopoly was confined to a 
class of paper which was not made by the owners of mills who were 
opposing the bill, and therefore nothing in it could take from them any 
trade they had had previously. Further, the company offered to lay 
open lists for further subscriptions of capital to any who chose to adven- 
ture, while security would be given for the rent of the additional mills 
which it was proposed to lease. This concession met the case of the 
Dean of Windsor, and it was agreed that a clause should be inserted, 
under which the company bound itself to take the mills belonging to the 
chapter, if required to do so\ 

The argument was against the ancient paper-makers, and it was stated 
that the opposition was aided by French agents. It is remarkable that 
this statement was accepted by the Committee and was incorporated in 
the preamble of the bill (which received the royal assent on May 20th), 
where it is said the members of the company had "at great charges 
purchased and erected diverse mills, with great hazards of their persons 
and estates, the said attempt being highly opposed by agents of the 
French King'^."" The act also sets out that, in spite of these and other 
hindrances, the manufacture had been set up and great quantities of 
paper were produced. In order to encourage the undertaking, so that 
the demand for white paper should be supplied from home manufacture, 
it is enacted that the charter should be confirmed for a period of fourteen 
years to be computed from the end of the session. Further, " for the 
better carrying on and improving the said manufacture and to the intent 
that the stock may be so increased as to establish the same in all parts 
of the kingdom and that all and every their Majesties' subjects, who shall 
be desirous to become members of the said company, may have liberty to 
do so,'' it is provided that the original capital of d£^20,000 was to be 
increased by a new subscription, the books for which were to lie open in 
Abchurch Lane and in some other public place till September 20th, 1690, 
" when any person may subscribe as many shares as he pleases at £60 
each " — that is at the par value. This clause is of considerable interest 
as possibly the earliest case of parliamentary control of the capitalization 
of a company. The act proceeds by prohibiting the export of rags, 
under pain of forfeiture, and it also ratifies the agreement reached for 

1 Imports Hist. MSS. Com., xin., Pt. v., pp. 74-6. 

2 There is evidence of such intrigues in the case of the Royal Lustring company^ 
vide infra, p. 74. 

Div. vm. § 1] Gh^eat Advance in Price of Shares 1692-4 67 

the protection of other paper-makers by forbidding the company to 
make paper, usually sold at 4,9. per ream or less^ 

There is no evidence to show whether the subscription of additional 
capital in 1690 was large or not. The earliest quotation of the shares 
was on March 30th, 1692, when the price was 60, or a premium of 
20 per cent. This was followed by a relapse until 41 was touched on 
May 5th. A recovery then set in and 49 was quoted at the end of June. 
There is no record of the movements of prices for the remainder of the 
year, but in January 1693 the shares stood from QB to 67. Up to the end 
of April they were over 70. Towards the close of May there was a fall 
to 69 which was continued till 59 was recorded on July 19th. From this 
date there was a steady advance — 70 being quoted on September 13th, 
80 on the 28th, and 90 on October 11th, while on December 29th the 
price was 94. At this time the company seems to have been doing a 
large business. Sales were frequently advertized as to be held at its 
house in Queen St.'^, while Houghton describes it " as a great manufac- 
ture^.'' Even the person of quality, who wrote the jeremiad which he 
entitled Anglice Tiitamen, is forced to confess that, though the perfection 
of the finer French papers had not been wholly attained, the English 
makers " had then come pretty near it ""' and their work had " wonderfully 
improved.'"* The rag-pickers, all over the country, were kept busy in 
supplying the raw material, and the industry, as a whole, was described 
as being in a flourishing condition ^ 

These favourable estimates of the future of the company are reflected 
in the quotations of its shares, during the early part of the year 1694. 
Up to January 17th the price remained at 94. From the 24th (when it 
was 97) it steadily advanced. The rapidity of the rise is shown by the 
following summary of fluctuations, during the ensuing three months : 

1694 (week ending Friday) February 2nd, 9th 

« „ „ 16th 

„ „ „ 23rd, March 2iid . 

. 105 
. 120 

„ „ March 9th, 16th, 23rd 

. 150 

„ month of April 

. 140 

For some reason, Houghton ceases to print quotations of these shares 
after April 1694. It is probable that there was a considerable reaction 
in the price. In 1696 the Commissioners of Trade reported that the 

1 MS. Act to encourage the manufacture of White Paper, 2 Will, and Mary, 
No. 25, House of Lords MSS. 

2 London Gazette, No. 2959, March 19, 1694 ; No. 3000, Aug. 9, 1694 ; No. 3053, 
Feb. 11, 1695 ; No. 3129, Nov. 4, 1695. 

3 Collection for Improvement of Husbandry and Trade, by John Houghton, No. 103, 
July 20, 1694. 

* Pubhshed 1695, p. 25. 


68 The White Paper Makers' Company [biv. vm. § 1 

company " was not in so thriving condition as it might have been,"'"' and 
they attributed its dechne to the evils of stock-jobbing management. 
Just at this time a number of companies, founded during the recent 
boom, had come to grief in the subsequent crisis, and the charge of 
stock-jobbing became the facile explanation of the failure — ;just as the 
diagnosis of " a fever,'' by the medical practitioners of the period, covered 
a multitude of disorders ^ 

At this time the paper-making industry was experiencing the effects 
of the prevailing depression, and a further adverse influence arose out of 
the financial necessities of the government. The House of Commons 
decided early in 1697 to impose a duty of 20 per cent, ad valorem on 
all paper made in England and one of 25 per cent, on that imported. 
The company joined with the other manufacturers in petitioning against 
the former tax which was intended to last for two years and which was to 
be levied on vellum, parchment and pasteboard. The line of argument 
adopted, against the imposition of the tax on home-made paper, was the 
contention that great injury would be done to the trade, while the pro- 
duce of the tax, if consumption remained the same as in the previous 
year, would be only ,£'^17,600. The whole amount of paper, used in 
England, was estimated to be worth d£^68,000, of which ,^£'40,000 was 
imported. There were 100 mills making coarse papers with an average 
annual production of £9^00 each, or ,^20,000 in all. The company had 
eight mills the output of which was valued at ^8 ,000 2. In spite of 
this protest, the duties were imposed by the act 8 and 9 Will. III. c. 7^. 

It is probable that the paper-makers had considerably underestimated 
their output. • This was certainly the case with the company, since 
according to a report of the Commissioners of Trade dated December 23rd, 
1697, that is after the duties had been imposed for six months, its annual 
production was 100,000 reams of white paper. Now, under its act, the 
company was forbidden to make paper, which sold at ^s. per ream or less, 
therefore, instead of its annual production being only £SfiOO a year, it 
must have been at least ^20,000 and may have been worth double that 
sum. This report assigns, as causes of recent hindrances to the progress 
of the trade, the charge of stock-jobbing and also that there had been a 
scarcity of white rags*. The fact, that the supply of rags was deficient, 
is indirect evidence that the production of all kinds of paper was con- 
siderably greater than it was stated to have been in the petition of the 

1 Journals of the House of Commons, xi. p. 595. 

2 The Case of the Paper-Traders, Humbly offer d to the Honourable House of Commons 

[P1697], Brit. Mus. '-^ — . The proposed duties at the specified rates would 

amount to £16,600. The remaining £2,000 arose from the tax on parchment, &c. 

3 Statutes, VII. p. 190. * Journals of the House of Commons, xii. p. 435. 

Div. vm. § 1] Consequences of Taxes on Paper 1697-9 69 

manufacturers, while the complete absence of any quotations of the shares 
for more than three and a half years shows that there can have been no 
active speculation in that period. At the same time, there is independent 
testimony that the industry soon became depressed and it was described 
as being " almost quite sunk under the weight of the present tax^" The 
company appears to have been particularly affected by the check to the 
demand, which followed the rise in prices, and it is recorded that many 
mills were compelled to abandon the making of white paper and to con- 
fine themselves to the production of the commoner and cheaper varieties 2. 
Such a change would have meant the winding up of the company, since 
the act, it had obtained, precluded it from adopting this course, and it 
is significant that when in 1699, the duties of 1697 having expired, there 
was a warm debate for and against the increase of the protection of 
English-made paper, there is no mention of this company^. It was 
eventually resolved by the House of Commons that the duty on home- 
made paper should remain at 20 per cent, while that on foreign was to 
be increased to 30 per cent.^ On the bill being sent to the Lords, an 
amendment was inserted by the latter House resulting in considerable 
friction. Neither side would recede from the position it had taken up, 
and the bill did not become law\ Therefore the paper-makers lost the 
protection of 10 per cent., in addition to that afforded them by " the 
book of rates.*" There is no evidence to show at what time the company 
retired from business. The English paper-making trade, on the whole, 
progressed. About 1710 there were 150 mills, producing 60,000 reams 
annually^, while three years later all " the lower sorts," used in England, 
were made at home, and it was estimated that the production of white 
paper then amounted to between ^£30,000 and .£^40,000 a year^ On the 

1 A Proposal for Building a Royal Library and establishing it by Act of Parliament 
[by Richard Bentley], London, 1697 T Brit. Mus. '-^ — J. 

, „ . ,^ 816. m. 12 

2 Reasons for further additional Duties on Paper [? 1698-9], Bnt. Mus. — gg • 

3 An Abstract or Short Account of the Duty laid upon Paper ; Reusom Humbly 
offered., for laying a farther duty on all foreign paper ; Reasons humbly offer d... against 
laying a farther duty upon Paper ; Reasons against further additional Duties on Paper 
[Brit. Mus. 816 . m . 12, Nos. 40, 41, 42, 43] ; Journals of the House of Commons, xii. 
p. 661. 

* Journals of the House of Commons, xii. p. 648. 

5 Ibid., p. 683 ; Journals of the House of Lords, xvi. pp. 461-3 ; The Manuscnpts 
of the House of Lords, 1697-9, in. pp. 424-35. 

6 The Case of the Merchants importing Genoa Paper. . .in relation to the Duty on Cardi 

fr, .. A^ 816 . m . 121 
Bnt. Mus. ~ J. 

7 The British Merchant or Commerce Preservd, by Charles King, London, 1721, i. 
p. 14. 

70 The White Paper Makers' Company [div. viii. § 

other hand it was contended, at this time, that the paper trade was one 
which had suffered from the remission of the previous high import duties^ 

Summary of Capital and Prices of the Shares. 


Up to May 1690, 400 original shares of £50 each £20,000 

A new siihscription was taken from June to September 20th, 1690. 



Prices of 



Date of highest price 


Date of lowest price 


March 28 


May 5 


December 27 


July 19 


Feb. 28, March 7, 14, 21 


Jan, 5, 10 


^ Extracts from Several Mercators, being considerations on the State of British Trade, 
1713 [Brit. Mus. 8246. b. 9], p. 7. 


The Irish Paper Company (1690). 

The Governor and Company of the Royal Corporation 
OF London for carrying on the Linen and Paper 
Manufacture within the Islands op Jersey and 
Guernsey (1691). 

The Blue Paper Company (1691). 

The Brown Paper Company (1692). 

Col. John Perry and Partners (1709). 

Besides the company of White Paper Makers and the Scots Paper 
Manufacture^, there were several other paper companies. One of these 
was also founded by Nicholas Dupin, and arose out of a patent granted 
to him in 1690 for the manufacture of white paper in Ireland for 14 years 2. 
On August 7th of the following year a warrant was issued to incorporate 
a paper and linen company for Jersey and Guernsey, which was to have 
a governor, deputy -governor and eighteen assistants. The qualification 
for office consisted in the holding of shares, and seven members of the 
court constituted a quorum. Power was also given to elect a sub-committee 
to manage the affairs of the company in the Channel Islands ^ In Aiiglice 
Tutamen mention is made of a Brozmi Paper Compani/\ which probably 
originated out of an invention by Thomas Neale and another for making 
brown and coloured papers, '' without using coarse or fine rags or linen 
cloth,"' out of a material of which store may be had in England and 
Ireland ^ 

The most interesting of these minor paper companies was the one 
that went by the name of the Blue Paper Company/. As in many similar 

^ Vide infra, Division ix.. Section 6. 

2 State Papers, Domestic, Signet Office, xii. p. 354 ; Patent Rolls (Four Courts, 
Dublin), April 7, 3 Will and Mary. 

3 State Papers, Domestic, H. O. Warrant Book, vi. p. 142. * p. 25. 
^ State Papers, Domestic, Petition Entry Book, i. p. 400. 

72 Irish, Brown and Blue Paper Cos. [div. viii. § 2 

cases, where there was no charter of incorporation, the title is uncertain, 
the company having arisen out of the sale of shares in the benefit of afl 
patent, and the rights and responsibilities of membership were defined 
by an agreement. The particular patent, on which this undertaking was 
based, was one granted to William Bayly in November 1691 for printing 
paper " with all sorts of figures and colours by several engines made of 
brass, without paint or stain, which will be useful for hanging in rooms \"''' 
An advertisement of the company gives a clearer idea of the nature of its 
product, which is described " as Japan and Indian figured hangings and 
another sort, consisting of large Japanese subjects and forest work also 
imitation of wainscot^." The shares of this company were quoted in 1692 
from 11 to 10 and in the following year from 12 to 9, while in 1694 the 
price fell to, and remained at, 8. But despite the depression in the 
stock-market, the business seems to have been flourishing. During the 
year 1694 the accommodation at the company's office — the Blue Paper 
Warehouse in Aldermanbury — was insufficient, and sales were conducted 
at the ''large Japan Warehouse*" in Henrietta St., Covent Garden {i.e. the 
premises of the " company for lacquering after the manner of Japan'''"), 
while in addition a number of agencies were opened. Evidently the new 
wall-paper had become popular, for imitations began to be put on the 
market on a thinner paper and coloured " with a slight and superficial 
paint*" ; and, besides wall-papers, in the same year " blue sugar loaf and 
royal purple papers " were advertized for sale^. During the next ten years 
similar advertisements were frequent, so that it may be concluded that 
the business continued to flourish throughout the fourteen years for 
which the original patent had been granted^. 

In 1709 there was a partnership for the production of white paper 
in Ireland under the management of Col. John Perry. In that year this 
undertaking appears to have met with some success, since it petitioned 
the House of Commons for legislation which would prevent the destruc- 
tion of white rags which were required for the manufacture'^. 

^ State Papers^ Domestic, H. O. Warrant Book, vi. p. 225. 

^ Houghton, Collections, No. 114. 

3 Vide infra, Section 9. ^ Houghton, Collections, No. 114. 

^ London Gazette, No. 2956, Mar. 12, 1694. 

6 E.g. London Gazette, No. 3117 ; Postman, July 8, 1703. 

^ Petitions to the Irish House of Commons, Four Courts, Dubfin ; Petition of 
Col. John Perry and Partners, June 2, 1709 ; The Journals of the House of Commons 
of the Kingdom of Ireland (1796), ii. p. 206. 

OF ENGLAND (1688-1720). 

During the controversy which raged in the reigns of Charles II. 
and James II. over the commerce between England and France, much 
attention was directed to the trade in silks. In 1674 the value of the 
imports of these goods was estimated to have been =£^300,000^; while in 
1686 the amount, recorded as having passed the Customs, was slightly 
more, though it was calculated that so much was smuggled that the 
total annual consumption could not have been less than ^500,000^. By 
the later date a material known as alamodes, lustrings, lutestrings, lutes 
or renforcez had become fashionable. It was "a fine, light, glossy, black 
silk^,*" the peculiarity in the production of which consisted in the 
secret of the "lustrating," i.e. in the imparting of the lustre or gloss. 
A Frenchman, Pierre de Cloux, was acquainted with the art ; and, having 
obtained the support of a number of persons who were prepared to 
provide the requisite funds, a petition was presented on behalf of the 
syndicate on November 28th, 1687, asking for a patent for the industry 
as one new to England^. That the manufacture had not been hitherto 
practised in the country seems to have been admitted at the time, though 
later very circumstantial accounts were given of the early production of 
considerable quantities of lustrings. The Weavers' company asserted that 
in 1663 several pieces had been made^ In 1696 a number of persons 
testified that between 1681 and 1686 they had seen many pieces that had 
been made in Spitalfields, indeed one of these asserted that the English 

1 A Scheme of the Trade at Present carried on between England and France (in 
Somers' Tracts, iv. p. 536*). 

2 Charles King, The British Merchant or Commerce Preservd, 1721, i. pp. 320, 328. 

3 Murray's Dictionary— " Alamodes." It is interesting to notice that in 1622 
Malynes mentioned "lutestrings" as a luxury, which he considered might reason- 
ably be made a monopoly. Consuetudo, p. 213. 

4 State Papers, Domestic, James II., Petition Entry Book, lxxi. p. 394. 

^ The Weavers Answer to the Objections made by the Lustrings" Company (1696) 

[BHt.Mu.. -«,»-«]. 


74 The Royal Lusti^ing Company [div. viii. 

production at that time was 4,000 or 5,000 pieces a year>. These 
statements can be shown to be false. The writer of a political 
pamphlet wishing to find a metaphor which characterized arbitrary J 
government, as a recent importation from abroad, speaks of it as 
"this Allamode de France^.'''' Moreover, about 1683, Stephen Seignoret, 
a silk merchant then living at Lyons, having consigned a consider- 
able quantity of lustrings to London, which had been damaged on 
the voyage, could not obtain a dresser in England who was able to 
restore the gloss. It is highly significant of the jealousy with which 
the weavers of Lyons guarded their trade-secrets, that the municipality 
would only consent to a French dresser leaving for London to under- 
take the work on condition that Seignoret himself should be kept in 
custody till the man returned I Later in 1687 another French lustring 
dresser, who had come to England, was paid £1B by the French 
Ambassador to return home again, and, on his attempting to set out 
for London, he was imprisoned, while in 1698 it was supposed he was 
still in confinement. 

It will thus be clear that, at the date of the petition of De Cloux, the 
production of lustrings had not been regularly carried on in England. 
At the same time there were difficulties to be surmounted before a 
patent could be obtained. The law officers of the Crown reported in 
favour of the petitioners, in so far as the trade they proposed to start 
was new, but they recommended that reference should be made to the 
Commissioners of Customs to ascertain whether the revenue would suffer 
by the lustring industry being established'*. The result of this enquiry 
was not unfavourable to the hopes of De Cloux and his supporters. 
On March 9th, 1688, a warrant for a patent was made out, though 
the grant itself was not sealed till November 23rd. This document 
conferred on a number of persons named in it, together with any 
others they might subsequently assume as partners, the sole right 
of exercising the invention of making, dressing and "lustrating" those 
silks, known as plain black a la modes, renforcez and lustrings, subject 
to the following conditions. The patent extended only to such black 
silks, of the species described, as were used for scarves and hoods, the 
work was to be carried on under the inspection of the Weavers' company 

1 The Manuscripts of the Hotise of Lords, 1695-7^, ii. p. 139. 

2 The Growth of Popery and Arbitrary Government, by Philo Veritas, Cologne, 
1682, p. 161. 

3 The Report of the Committee of the House of Commons to whom the Petition of the 

Royal Lustring Company of England was referred, London, 1698 Brit. Mus. j 

— ' L reprinted in Journals of the House of Commons, xii. p. 213. J 

* State Papers, Domestic, Petition Entry Book, lxxi. p. 402. ■ 

Div. VIII. § 3] The Patent and Issue of Shares 1688-92 75 

of London, and monthly accounts were to be furnished by the members 
both of pieces made and of the looms employed \ 

The patent establishing the undertaking was completed just when 
the country was in the throes of the Revolution, and it was unfortunate 
that De Cloux, who was the only person possessing the requisite techni- 
cal knowledge, happened to be a Roman Catholic and left England in 
the train of James II. The company, which was in process of forma- 
tion, was thus brought to a standstill through want of expert advice; 
but, as the French refugees began to arrive in increasing numbers, it 
became possible to obtain a certain amount of suitable labour, and two 
looms were started and kept at work. On the prohibition of commerce 
with France, arising out of the declaration of war against that country, 
the patentees were not slow to recognize that a wide field had been 
opened up for their enterprize. Towards the end of 1691 or in the first 
months of 1692, sustained efforts were made to greatly extend the 
operations of the company. The financing of the undertaking was 
arranged by a Mr Gervaise who fixed the capital at ,£*60,000, divided 
into 2,400 shares of ^25 each 2. The earliest transaction recorded was 
on April 14th, 1692, when the price realized was 32. In May the 
assistants decided that sales should be made to the public at 30, and 
many purchases were arranged at this price during the remainder of 
the year. In the accounts of the company the capital was always 
regarded as being ^£^60,000 and therefore it may be inferred that, out of 
the issue price of d£*30, £6 consisted of a reimbursement to the owners 
of the patent of their outlay together with promoters' profits, while the 
remaining ^25 per share was used in carrying on the business. On 
May 14th, 1692, a petition was presented which stated that lustrings 
were being produced and asking that, since there were now 134 persons 
interested in the patent, a charter of incorporation should be granted to 
them^ The Solicitor-General reported on May 30th that great per- 
fection had been attained in this manufacture, and he recommended 
that the company should be incorporated*. On July 28th a warrant 
was issued for the preparation of a charter ^ Some delay arose from 
the intervention of the Weavers' company, but at a full court of this 
body, held on October 10th, a clause was read, which it was proposed 
should be included in the grant, and which stated that this document 

1 State Papers^ Domestic, H. O. Warrant Book, iv, p. 400; Journals of the House 

of Commons, xii. p. 221 ; The Case of the Weavers who are Petitioners to be relieved 

-, r^ . ,. 816 . m . 13"! 
against a Clause in the Coale Act [1695] Brit. Mus. zrz^ . 

2 Journals of the House of Commons, xii. p. 221. 

3 State Papers, Domestic, Petition Entry Book, i. p. 292. * Ibid., p. 307. 
5 Ibid., H. O. Warrant Book, vi. p. 383. 

76 The Royal Lustring Company [div. viii. 

was to be interpreted as cqntaining nothing prejudicial to the Weavers' 
company, whereupon it was agreed that all opposition should be with- 
drawn \ When at length the charter was sealed, it incorporated those 
interested in the patent of James II. as the Royal Lustring Company of 
England with the usual powers, which however were to be subject to all 
the conditions embodied in the grant of 1688. The government of the 
company was committed to a governor, deputy -governor and twelve 
assistants. The minimum qualification for a vote was the ownership of 
10 shares, and no holding entitled the proprietor to more than a single 
vote^ In addition to the royal charter, there came encouragement 
frpm Parliament, since it was enacted that, after March 25th, 1693, no 
foreign lustrings might be imported except under licensed 

The company received influential support. The Stephen Seignoret, 
already mentioned, purchased 382 shares*. A "Lustring House" was 
opened at Austin Friars, where large sales of alamodes were made from 
time to time for many years ^ Office-hours, except before and after 
sales, were from 8 till 12 o'clock, and from 2 to 6 o'clock daily, except 
Sundays and holidays^. Business proved good, and at one sale alone, 
in October 1693, the lustrings, auctioned by "inch of candle," realized 
cj^l4,000 '. The company was able to increase the number of looms, but 
it was not long before friction arose with the English silk weavers. 
At first, as was indeed necessary, French artisans had been employed. 
These worked at a cheaper rate than had previously obtained in London. 
As the English apprentices had begun to acquire skill, pressure was put 
on the governor and assistants to discharge their foreign hands. The 
company was accused "of taking bread out of the mouths of the native 
weavers," and the men themselves were not slow to take forcible means 
of persuading the governing body. They followed the assistants to 
their homes in a riotous manner, making threats and breaking windows ^ 
Compulsion in the same direction was exerted by the powers of 
inspection granted to the Weavers' company; and, eventually, the 
governor had to give way and many of the French workmen were dis- 
missed. This action had a double result which manifested itself in the 
future. On the one hand, the piece-work wages were higher, though in 
all probability not to the extent recorded by Charles King, who gives 
the English rate in this trade as more than double the French^. On 

1 Court Books of the Weavers' Company (1692-4), xii., Oct. 10, 1692. 

2 The Charter of the Royal Lustrmg Company [Brit. Mus. 8223. e. 69]. 

3 4 Will, and Mary, c. 5, § 5, Statutes, vi. p. 384. 
* Journals of the House of Commons, xii. p. 222. 

s London Gazette, No. 2855, Mar. 30, 1693. « /jie?., Feb. 11, 1696. 

7 Houghton, Collections, No. 65, Oct. 27, 1693. 

8 Treasury Papers, cxxxix. 19 ; Calendar, 1708-14, p. 327. 
^ Charles King, The British Merchant, i. p. 8. 

Div. VIII. § 3] Position of the Industry 1692-B 77 

the other side, it is to be feared that the change was accompanied by 
a deterioration in the quality of the product; for if, as was frequently 
stated, the secret of "lustrating" silks was unknown to English weavers 
up till 1690, it would necessarily take a considerable period for the art 
to be thoroughly mastered by them. 

It needed time for these disadvantageous elements in the organization 
of the company to manifest themselves, and in 1694, 1695 and 1696 it 
enjoyed great prosperity. Houghton spoke of this trade in 1694 as 
one which England had "wanted much," and he considered that the 
Royal Lustring company was likely to outdo all the others that had 
been recently established ^ Even the pessimistic writer of the tract, 
AngUw Tutamen, finds himself compelled to admit that this under- 
taking was thriving, and he believed it would continue to do so, "whilst 
it kept stock-jobbers from breaking in upon itl"' Publicity was given 
to the quarterly sales, and from time to time paragraphs appeared in the 
press, which were designed to draw attention to the enterprize, as for 
instance when it was recorded in 1695 that the King had been pleased 
to assure the company of his protection, that he had lately granted 
further encouragement, to which the practical note was added that the 
assistants were willing to employ weavers free of the Weavers' company^. 
By the act 6 and 7 Will. III. c. 18 it was provided that lustrings, 
imported under license, must be sealed at the Custom House, those 
produced at home were to be sealed by the Lustring company. Any of 
these fabrics, found without either of these seals, were subject to for- 
feiture, and the goods seized according to this section might, after being 
condenmed at the Custom House, be purchased solely for exportation. 
In 1696 a bill was promoted in the interests of the Weavers'* company, 
giving that body equal rights in the sealing of lustrings made in 
England, but the measure did not become law^. This legislation was 
important, not only in aiding in suppressing smuggling, but also in 
giving the Lustring company some supervision over the Weavers' 
company, so that both organizations met on more equal terms. 

In another respect too the company had strengthened its position. 
The Duke of Savoy, like the rest of the allies, had prohibited the 
entrance of French goods into his territories. The people, however, 
were in want of cloth; and, unless the prohibition was relaxed with 
regard to this commodity, they must obtain it from England. Since 
the Lustring company brought silk in large quantities from Piedmont, 

1 Collections, No. 103, July 20, 1694. 

2 p. 30. It is significant too that Defoe {Essay upon Projects, 1697, p. 13) does 
not mention this company as one of the failures through stock-jobbing. 

3 Houghton, Collections, No. 169, Oct. 25, 1695. 

^ The Manuscripts of the House of Lords, 1695-7, ii. p. 138. 

78 The Royal Liistrmg Company [div. vni. § 

it was suggested that it should export cloth there; and accordingly \i 
1696 an experimental shipment valued at ,£*1,500 was made^ 

Testimony to the progress, already made by the company and to its 
future prospects, is borne by the quotations of the shares. From the 
issue-price of 30 there had been a fall till 20 was touched at the end of 
1694. From that date, contrary to the general course of industrial 
securities, the shares rose till 33 (for cash) or 38 (in bank-notes) was 
recorded in 1696. Such a price, in view of the prevailing depression 
during the crisis, shows that the company was considered to be doing 

It is possible to some extent to reconstruct the state of its finances 
in 1696. It had, at that time, 670 looms at work in London and 98 at 
Ipswich, making a total of 768, which gave employment to about 6,000 
persons 2. A loom was capable of making 10 to 12 pieces of lustrings 
in the year, each of which contained on an average 4 lbs. of silk and con- 
sisted of some 60 ells in lengths Since the total demand of England for 
lustrings, while this trade with France was open, was estimated at 10,000 
pieces annually, it will be seen that the company had brought its capacity 
up to a point which approximated to the amount required just before the 
Revolution. Whatever might have happened in the future, as yet the 
maximum output was not being produced. It was said by the Weavers' 
company, which at that time was hostile to the Lustring company, that 
the latter during the first four years of its existence had only made 
9,000 pieces ^ Doubtless this is an underestimate, but, if any reliance 
can be placed on it, the output in 1696 is unlikely to have been 7,680 
pieces. Taking the circumstances into account, it may be estimated 
that the actual production in that year was 5,000 pieces. The prices at 
which bidding started at the sales were from £19^ to £\Q per piece. 
Taking the average of these, the output for the year may be valued at 
:£^70,000. From this must be deducted the cost of production, which 
consisted of two main elements. There was first the value of the 
silk consumed. This was returned at a later date as 30*. per Ib.^ Since 
a piece contained on an average 4 lbs. of silk, the cost of the raw 
material came to £Q. The other important element of outlay was 
the payment of labour, which was made on a piece-work basis. It is 

1 Journals of the House of Commons, xn. p. 230. 

2 Ibid.y XII. pp. 224, 225. 

s Ibid., XII. pp. 219, 225, 226. 

* The Weavers' Answer to the Objections made by the Lustrings Company Brit. Mus. 
816. m. 13' 



" Treasury Papers, cxxxix. 19 ; Calendar, 1708-14, p. 327. 

Div. VIII. § 3] Manufacturing Profit 1695-6 79 

recorded that the expense under this head came to \s. per elP; that is, 
for the piece averaging 60 ells, to £Q. So that altogether the manu- 
facturing costs came to £^ for the piece, leaving a profit of £6. It 
may be noticed in passing that the wages appear unduly low in respect 
to the numbers of persons employed. It is true that a loom could 
earn <^30 to £^Q a year, but this was divisible amongst seven or eight 
persons. Allowing that some of these were apprentices, the earnings 
of the master-weavers would seem to have been small even for the time. 
The explanation of the apparent anomaly is to be found in the fact 
that one weaver frequently superintended the working of several looms. 
Thus, as against 670 looms at London, there were only 229 master- 
weavers, several of whom had charge of 16, 17, 18, and 19 looms each 2. 
This phenomenon would apply also to the dyers and to some of the other 
occupations, so that it becomes necessary to this extent to revise the 
figures furnished by the company that 768 looms would maintain 
6,000 hands. These results give the manufacturing profit on the basis 
of an output of 5,000 pieces, which may be summarized as follows : 

Manufacturing Profit of the Royal Lustring Company in 1695-6. 

£ £ 

The estimated animal output of 5^000 pieces was valued 

on an average at £14 per piece 70,000 

5,000 pieces required 20,000 lbs. of silk at SOs. per lb. 80,000 
5,000 pieces, containing on an average 60 ells, cost for 

labour at I*', per ell 15,000 45,000 

Balance being manufacturing profit = to nearly 35% on 

the issue-price of the shares .. . ... 25,000 

This statement is confirmed by the account given of the liquid 
assets of the company at the end of 1696. It had finished goods on 
hand worth <^30,000, its stock of raw silk was valued at =£^20,000^ In 
all probability the debts, due to the company, exceeded those owed 
by it. To this total was to be added that of buildings and looms. 
Since Lewis Crommelin obtained between ^^30 and <^50 each for those, 
used by him in making linen *, it is likely that the value of the 768 looms 
may have been as much as =£^25,000, so that altogether it is clear that 
the whole assets of the company were calculated to be worth con- 
siderably more than the nominal capital, or even than the total sum 
represented by the aggregate issue-price of the shares. 

1 Charles King, The British Merchant, i. p. 8. 

2 Journals of the House of Commons, xii. pp. 224, 225. It was, however, stated 
by the governor in 1711 that the weavers, employed in 1695, numbered 507. 
Treasury Papers, cxxxix. 19. 

^ Journals of the House of Commons, xii. p. 210. 

* Treasury Papers, lxxxiii. 104 ; Calendar, 1702-7, p. 96. 

80 The Royal Lustrmg Company [div. viii. § 

These results represent . the summit of prosperity attained by t 
company during the early years of its history. Towards the end 
1696 its trade began to fall off, and the next year witnessed a sudden 
and dramatic change in its fortunes. In spite of the increased measure- 
of protection, conferred by Parliament, which raised the valuation ofl 
foreign lustrings, on which Customs were to be paid, from 40,y. per lb. to 
80*. per lb. ^, and which was tantamount to prohibition, the sales of the 
company continued to decline. By the summer of that year, although 
the production had been diminished, the stock of lustrings had increased, 
and over £50fi00 w^as locked up in it. It became increasingly difficult 
to make sales, even at reduced prices; and, by the beginning of 1698, 
the number of looms in operation had been reduced from 768 to 40 
or 50 ^ No doubt the recent crisis would account foj a considerable 
falling off in the demand, but it was apparent that the complete 
explanation must be sought elsewhere. Under the monopoly of the 
charter, the company was the sole producer of lustrings in England, 
these fabrics could not be legally imported from France, while the duty, 
recently imposed, should have protected it against the competition of 
other foreign countries. The only solution was that there had been 
a remarkable increase in the quantity smuggled. The agents of the 
company began to feel the opposition of some powerful and secret 
competition, which had created an organization immensely more skilful 
than the sturdy "free-traders'"* of the coasts. For some time all efforts 
to unmask this combination of adverse influences were fruitless. At 
length a clue was found in the seizure of a passport, issued by the King 
of France, granting safe-conduct to an English ship to load silks. 
This document, which was dated July 7th, 1695, was enclosed in a 
letter to a banker at Paris, signed by G and B^ which asked for a 
renewal of the safe-conduct^. The problem then arose to discover the 
identity of the persons, described by these initials. By April 1697 
it was found that these were two partners. Frenchmen resident in 
London, named John Goudet and David Barrau. A search-wan-ant 
was obtained in June, and Goudef's books and papers were seized. 
Most of the important letters were in cipher, but, as these were inter- 
preted, evidence began to accumulate, which pointed to transactions of 
more than commercial importance. The company was now in a position 
to approach Parliament; and, on February 18th, 1698, its petition was, 
considered and referred to a Committee ^ 

The investigation, which ensued, was a very thorough one, and the 

* Statutes, ^'11. p. 401. 

2 Journals of the Hov^e of Commons, xu. p. 210. 

3 Ibid., xii. pp. 210, 223. 

4 Ibid., XII. p. 118. 

Div. VIII. § 3] Losses by Smuggled Silks 1696-7 81 

report resulting from it, presented on April 16th, is a document of 
extraordinary interest. It contains, in the bald official precis of the 
evidence, the records of eye-witnesses of all those stirring episodes that 
are now chiefly remembered as a part of the mechanism of the tale of 
adventure. The escaping Jacobite stealing secretly on board the lugger, 
sailing from Romney Marsh, where "there was not one in a hundred 
but is concerned in the owling-trade'' which they would follow in spite 
of all risks, "even if there were gallows erected at every quarter-mile 
along the coast"': the system of passwords, ciphers and secret signals: 
men passing under false names and disguises: the informer screwing up 
his courage to risk his life for the sake of the reward — all these figures 
constituted the dramatis personce of the enquiry. But behind and 
beyond such picturesque episodes lies the greatest value of the report, 
in so far as it reveals the prime movers, by whom the subordinates were 
set in motion. Thus the complete organization of a highly developed 
system of contraband trade is unmasked. Its ingenuity consisted in the 
success with which the furtive character of the sale of goods, illicitly 
imported, was overcome. As a general rule the danger, involved in the 
marketing of commodities that had been smuggled, meant lower prices 
with a consequent reduction in the profit which might otherwise have been 
obtained. It was comparatively rare for large wholesale merchants to 
deal in contraband goods, and it was by the adhesion of a number of 
members of this class that it became possible to devise a comprehensive 
scheme for the open sale in England of lustrings that had been made 
at Lyons. Though Goudet was first detected, the leading personage, 
amongst the infringers of the Customs laws, was Seignoret, who had 
been an assistant of the Lustring company and who owned shares in it 
as late as 1698. He was a man of great wealth, having by himself or 
with the aid of his friends lent the government no less than ^^400,000. 
In July 1697 he held as much as ^^1 05,000 in public securities ^ The 
other participants in the scheme, though their fortunes were not so 
great, were all men of considerable means and good credit, most of 
whom were of French extraction, but carrying on business in London. 
Seignoret was himself a native of Lyons, and he kept in touch with the 
silk trade there. He knew that there was a great antagonism to the 
Lustring company amongst the weavers of France, who had been 
informed that "the patent could be broke by the expenditure of 
100,000 crowns 2.'' It was firmly believed by the assistants that a 
"public stock had been raised at Lyons to destroy the traded" Certainly 
the French makers quoted very low prices to anyone who would take 

1 Journals of the House of Commons, xii. p. 222. ^ Ihid., xii. p. 211. 

2 Treasury Papers, cxxxix. 19 ; Calendar, 1708-14_, p. 327. 

s. c. iir. " 

82 The Royal Lustring Company [div. viii. § 3 

the hazard of running their goods into England ^ The French mer- 
chants in London, who joined with Seignoret and Goudet, formedM 
themselves into a secret company and made calls on the members'. 
Lustrings were run in the usual manner and were stored in concealed 
receptacles in the lighthouses or other secure hiding-places, until they 
could be safely removed^. The seals and debentures, used at the 
Custom House, were copied with the most minute fidelity, and some of 
the genuine ones of the Lustring company were obtained by fraud. 
Nothing then remained but to fix these marks to the French goods, 
when they could be sold openly. After this plan had been in operation 
for some time, a further refinement was devised, by which the lustring^jB 
made in Lyons, were conveyed to Rotterdam by Lisle and Antwerp'*. 
On the arrival of the packages, the French seals were replaced by Dutch 
ones, and the goods were shipped to England in the ordinary way. 
This method was safer than the former one, though less profitable, but 
the gain was increased when the silks were run in the usual manner and 
brought to London, where they were again marked as having passed the 
Customs. The contraband trade, that sprung up suddenly, assumed 
vast proportions — a single cargo, that was successfully landed, was 
valued at c^'7,000'^. A common shipment of lustrings was one worth 
about half that amount^. Necessarily the loss of revenue was con- 
siderable, while the Lustring company suffered greatly. But a more 
serious aspect of the case was the element of treasonable correspondence 
suggested by the discovery of a French safe-conduct, of the most ample 
kind, for an English vessel, while the countries were at war. Necessarily 
some consideration must have been given for a protection of this nature; 
and, in the opinion of the House of Commons, information was sent 
to France, disclosing particulars of the state of the country and of 
naval and military preparations''. Since none of the original corre- 
spondence was seized, there was no direct proof of this charge, but it 
is significant that Goudet was sufficiently indiscreet to keep copies of 
his letters to Baudran, a banker at Paris, which show that he and his 
associates were working energetically against the conclusion of the treaty 
which England was then negotiating with Savoy". 

1 Journals of the House of Commons , xii. p. 213. '^ Ibid., xii. p. 214. 

3 Ibid., XII. p. 213. 

* Complaints were frequent that the Dutch gained, by being able to pursue a 
direct trade with France, whereas Britain could only obtain French goods *^^at 
second-hand," through the Dutch — Great Britain's Union, and the Security of the 
Hanover Succession considered, 1705, in Somers' Tracts (1751), xv. p. 108 ; Some 
Short Considerations concerning the State of the Nation, in State Tracts published duririg 
the reign of William III., u. p. 323. 

^ Journals of the House of Commons, xii. p. 212. 

^ I.e. of 19 packets containing each 10 to 12 pieces. Ibid., xii. p. 217. 

7 Ibid., xii. p. 272. » Ibid., xn. p. 218. 

Biv. viii. § 3] A Smuggling Company detected 1698 83 

The allegations of fraudulent importation had been fully established, 
and it was decided to impeach Goudet, Barrau, Longueville, Seignoret, 
Baudowin, Santini and Diharce as the chief offenders. A large number 
of others, who were implicated as abettors of smuggling or as receivers 
of the goods, were ordered to be prosecuted ^ As a result of the 
impeachment, the persons accused were fined =£^19,500, of which ^£^10,000 
was borne by Seignoret 2. It is significant of the acrimony with which 
the dispute between the Old and the New East India companies was 
being conducted that Shepherd — the promoter of the latter which was 
at this time obtaining capital — told Seignoret that he might better his 
case before Parliament if he subscribed^. 

Necessarily the Report of the Commons' Committee represents the 
purely English point of view, and, in order to ascertain whether it was 
distorted by prejudice or feelings of national animosity against the 
French, it is worth interrupting the main thread of the narrative to 
enquire to what extent confirmation of the evidence at the Parliamentary 
Enquiry can be obtained from information discoverable at Lyons. There 
are several petitions of the silk-weavers there which show that, after the 
prohibition of commerce by England, the industry was in a state of 
very great depression. They complained, for instance, that many were 
without work and were in great misery^ Their employers, being them- 
selves without an outlet for their production, could only employ a few 
hands ^ Application had frequently been made to the King, with a 
view of obtaining some alleviation of this " profonde misere^" As early 
as July 5th, 1695, a representation had been made that the exclusion of 
French silks from England was so complete that some new method must 
be devised to overcome the prohibition. It was then announced that 
the manufacturers of Lyons had resolved, in concert with certain London 
merchants, to purchase a small English vessel which it was intended to 
load at Calais, and a passport for this ship was asked from the King, 
with a view *'of concealing the design from the English and Dutch^'' 
Doubtless it was the passport, granted in response to this petition, 
which was seized in England in 1697 and which constituted the clue to 

^ Journals of the House of Commons j xii. p. 241. 

2 Journals of the House of Lords, xvi. p. 340. The whole of this fine went to 
Greenwich Hospital— Treasury Papers, cxxxix. 19. 

3 The Manuscripts of the House of Lords, 1697-9, m. p. 231 ; vide supra, ii. 
pp. 165, 166. 

4 Recueil du Precis des Titres et Papiers de la Communaut^ des Marchands et 
des Maitres fabriquants de la Ville de Lyon (this collection is also described briefly 
as " Inventaire de la Grande Fabrique"), No. 43 Q. 

^ Ibid., Nos. 4311, 43 T. « Ibid., No. 43 Q. . o • 

7 La Grande Industrie sous le Be^e de Louis XIV., par Germain Martm, Pans, 

1899, p. 254. 


84 The Royal Lustring Company [div. vra. § 3 


the discovery of the ingenious evasion of the prohibition, for which 
as has been shown, Seignoret and his abettors had been fined. 

It remained to reward those who had been instrumental in detectin, 
the culprits. Hilary Ranue, who afterwards became governor of the 
company, received an act of naturalization, grails'^. Payment was made 
to the governor, on behalf of the shareholders, of :£'2,400 out of the 
forfeitures of smuggled goods 2, and a continuance of this grant was 
promised for the next six years. Yet another act was passed with the 
double object of discouraging smuggling and of strengthening the 
company. The charter was explicitly recognized by Parliament, and 
the term of the monopoly was prolonged so as to cover the period for 
the ensuing fourteen years from June 24th, 1698. The prohibition of 
French lustrings was re-enacted, and the various previous regulations, 
as to the licensing and sealing of those from other foreign countries, 
were confirmed. To meet the disclosures made at the enquiry, some 
further stipulations were added, as for instance that all lustrings from 
abroad must be landed at London, that the penalty for the counter- 
feiting of seals involved the pillory and a fine of ^500 for each offence'^. 

The Lustring company, having succeeded in defeating the combi- 
nation formed to wreck it, proceeded to make the most of its victory. 
Publicity was given to the recent act in its favour, and energetic steps 
were taken to co-operate with the Customs officials in the detection of 
the smuggling of silks^ It was not long before this policy resulted in 
some friction with the Weavers' company. Six pieces of black silks had 
been seized as lustrings; and, at a full court, held on September 29th, 
1701, the Weavers protested that these fabrics were not of such a nature 
as to come within the scope of the act**. 

As might be expected, the effect of the great contraband trade had 
been to reduce the price of the shares, which fell from 83 in 1696 to 18 
in 1697. This quotation was maintained during the parliamentary 
investigation in 1698, but it is unfortunate that, after April 20th, the 
Lustring company disappears from Houghton's list. 

Altogether, apart from the loss by smuggling, the company suffered 
from the crisis of 1696-7 in being unable to collect money due to it, 
and a loan of ,£'22,000 had to be obtained^. A return towards pros- 
perity is shown by the proceeds of the sale held on March 3rd, 1698, 
when between ^£^10,000 and c^l 1,000 was realized. On this occasion, 

1 Journals of the House of Commons, xii. p. 241. 

2 Treasury Papers, lj. 51 ; Calendar, 1697-1701, p. 109. 

3 9 Will. III., c. 43; Statutes, vii. pp. 426-8. 
* London Gazette, No. 3463, Jan. 16, 1699. 

^ Court Books of the Weavers' Company, xiii. f. 8. 
^ Journals of the House of Commons, xn. p. 222. 

Div. VIII. § 3] Condition of the Company 1698-1706 85 

prices were considered good, 6s. per ell being obtained or ^18 per 
pieced The absence of any record of the proceedings at meetings of 
the company makes it impossible to determine its financial position in 
1698, As its stock was realized and debts due to it collected, there 
should have })een a considerable surplus. There are various indications 
that point towards the conclusion that there was not a sufficient market 
to employ all the looms that had been established in 1695. In accord- 
ance with contemporary practice, if there were such surplus funds, not 
required in the business, a dividend or division would have been made 
to the shareholders, which would have consisted of a return of capital, 
though not described as such. Had a division of this character been 
made, it would have had an important bearing on any quotations of the 
shares after 1700; since the price, then paid, would compare, not with 
the original sum of ^30, but with that amount less the capital returned. 
Though it would appear that the company was in a position to make 
a distribution of the kind indicated, there is one important consideration 
which has to be taken into account. The weavers, employed by the 
company, stated that they had been supported at the expense of their 
employers during "the calamitous times," when only a few looms were 
at work and when they would otherwise have starved ''. Such outlay 
may have consumed a large sum, which, under other conditions, would 
have been divisible amongst the shareholders, and it may have been 
that it was not found possible to make any large distribution. 

It was not long before it was seen that the repressive measures of 
1698 had not been effective in suppressing the smuggling of lustrings 
and silks. In 1703 the Weavers' and Lustring companies constituted 
a joint-committee to promote further legislation I It was proposed 
that an act should be obtained to compel the sealing, not only of 
lustrings, but of all black silks, made in England. At a "Common 
Hair' of the Weavers this scheme was rejected "as destructive to the 
traded" Just about this time the Lustring company began to ex- 
perience a new difficulty. On the renewal of the war between England 
and France, the products of the latter country were again formally 
prohibited. By an oversight in the drafting of the act, it was not 
expressly stated that goods, seized as contravening it, must be sold only 
for exportation. Hence French lustrings were being sold and worn in 
England. These facts were set forth in a petition of the company to 
the House of Commons, which was considered on January 15th, 1706^ 
and it was resolved that, since English lustrings equalled, if they did not 

1 Journals of the House of Commons, xii. p. 210. 

2 Treasury Papers, cxxx. 95 ; Calendar, 1708-14, p. 273. 

3 Court Books of the Weavers' Company, xin. f. 16. '* Ibid., f. 17. 
^ Journals of the House of Commons, xv. p. 236. 

^ The Royal Lustring Company [div. vm 


excel, those of French maniifacture, the company should be placed in as 
fa,vourable a position as it occupied before the late act \ Accordingly, 
a short measure w^s passed, giving effect to this resolution; and, in 
particular, prohibiting the wearing of French lustrings in England^. 
This legislation appears to have been effective for a short space; but, 
on the Union with Scotland, a fresh and somewhat ingenious attack 
was launched against the monopoly of the company. Under the Scottish 
act of 1681", though lustrings should have been mentioned (as these 
fabrips fell within the scope of the goods intended to be excluded from 
the country) they were not enumerated''. The act of Union established 
freedom of trade between England and Scotland, and therefore some 
merchants imported French lustrings into Scotland before this act came 
inito operation ; and, on its being put in force, they brought the goods 
to England, as having been "lawfully imported into Scotland." When 
the Lustring company effected a seizure, its legal advisers were met by 
the following argument — "the commodities in question cannot be liable 
to be exported, unless they be first forfeited; nor can they be forfeited, 
unlesg they w^re illegally imported, which undoubtedly they were not^." 
About the same time, it was afterwards alleged, the company had 
covered the importation of silk by private traders, thereby obtaining for 
the latter certain advantages in passing the Customs ^ 

By the year 1710-11 some indications are again obtainable of the 
financial condition of the company. In 1706 the shares changed hands 
at 15 J to 16^ In view of the possibility that considerable returns of 
capital may have been made, the depreciation was perhaps more apparent 
than real. It is true that Ranue, the governor, stated in 1711 that the 
losses, up tQ that date, had been d£'40,000^; but, since he was agitating 
to obtain payment of six years of the grant of ^2,400 (which had 
only been received once by the company), it is probable this version of 
the situation requires some modification. A truer view of the position 
can be gained by piecing together a number of statements which give 

1 Journals of the House of Commons, xv. p. 249. 

2 Statutes, VIII. p. 549. ^ y^^g infra, Division ix.. Section 1. 
* Acts of the Parliaments of Scotland, viii. pp. 348, 349. 

^ Observations on the Acts made for the Encouragement of the Lustring Company, 
which relate to the Exportation of French Alamodes and Lustrings ; humbly offered by 
Walter Stewart and William Murray, Petitioners [.^1708]. Similar practices were 
adopted in the case of wine and brandy— TAe Trade of Britain stated, being the 
substance of two Papers published in London on occa^im of the Importation of Wine 
and Brandy from North Britain [1708]. 

« Treasury Papers, cc. 32 ; Calendar, 1714-19, p. 235. 

^ A General Treatise of Money and Exchanges, by Alexander Justice, London, 
1707, p. 33. 

® Treasury Papers, cxxxix. 19. 

Div. vin. § 3] Manufacturing Profit 1710-11 87 

the profit from manufacturing. There were 200 looms at wo^, the 
output being 2,000 pieces annually. The cost of production remained 
about the same as it may be estimated to have been in 1695-6, that is 
M per piece. The price realized, however, was higher, being now as 
much as ^16 per piece. In this way the following result is obtained: 

Profit on Manufacture^ 1710-11. 

2,000 pieces at £16 per piece £32,000 

Cost of production at £9 per piece .., ... £18,000 
Manufacturing profit £14,000 

That the looms were fully employed appears highly probable from 
the fact that the return of the purchases of raw silk from August 1st, 
1710, to January 19th, 1712, happens to be in existence \ It amounted 
to 10,207 lbs. for that period. This would give an annual consumption 
of 7,500 lbs., which agrees fairly closely with that estimated inde- 
pendently in the foregoing calculation which would have been 8,000 lbs. 
Such a result, even after providing for the expenses of selling the goods, 
for the payment of officials to detect smuggling, for bad debts and other 
incidental outlay, ought to have left a balance sufficient to provide a 
respectable return on the capital. While the actual present position of 
the company in 1711 appears to have been satisfactory, the approaching 
determination of its monopoly made the outlook uncertain. The 
governor approached the government with a view to obtaining a pro- 
longation of the special privileges. It was urged that the company could 
employ 14,000 or 15,000 persons, "if it were suitably encouraged""; while 
new shareholders were promised admission, on their buying an interest, 
"at the intrinsic value of the stock 2." The weavers, working for the 
company, also petitioned in favour of its continuance, asserting that, if 
it were dissolved, they were faced with the prospect of starvation ^ 
When the treaty of peace with France was under negotiation, the 
company found that, should it be ratified in the form proposed, French 
lustrings would again be imported. It was believed by all the oppo- 
nents of the clauses, relating to commerce, that the lustring trade would 
not be able to survive the new competition*. Moreover, were this 

1 Chancery Proceedings (1714-58), Bundle 2355, Triquett v. Royal Lustring Co. 

2 Treasury Papers, cxxxix. 19. The reason for the latter offer is possibly as a 
reply to the objection that the shares had not been sold freely of late. In this respect 
the jointj-stock companies of the period were faced by a dilemma ; if sales were 
numerous they were accused of stock-jobbing ; if few, of the stock being monopolized. 

3 Ibid., Gx'xx. 95 ; Calendar, 1708-14, p. 273. 

* TM Trade with France, Italy, Spain and Portugal considered: With some Obsen-u- 
tions on the Treaty of Commerce betipeen Great Britain and France (Somers' Tracts, iv. 
p. 555 ; Charles King, British Merchant, i. p. 8). 


88 The Royal Lustring Company [div. vm. § 3 

part of the measure rejected, it had to be recognized that the Weavers'* 
company would oppose the renewal of the monopoly — indeed, on 
June 29th, 1713, the former body expressed the intention of entering 
on the making of lustrings, as soon as the privileges of the company 
were determined, or came to an end by the effluxion of time\ Under 
these circumstances the company decided to cease manufacturing; and, 
in an advertisement dated October 3rd, 1713, it was announced that this 
step had then been taken. After a final sale on the 15th, business was 
to be discontinued'^. A general court was held on November 6th at 
which a dividend was to be declared^; and, on December 17th, a further 
meeting was summoned for special affairs^. 

Although business, in the production of lustrings, was no longer 
carried on, the company continued to exist as a corporation. Doubtless 
there were numerous claims which required time to adjust. As late as 
September 24th, 1716, a former servant of the company made charges 
against the assistants, chiefly of small irregularities at the Custom 
House ^ The investigation of these complaints, together with other 
matters of detail, delayed the dissolution of the undertaking. There 
were still some assets remaining at the end of 1719; and, when the 
boom of 1720 began, steps were taken to make a fresh start or else 
to dispose of the charter. There seem to have been negotiations with 
one of the marine insurance undertakings before February, with a view 
to the latter course. Eventually it was resolved to raise more capital 
for manufacturing, and 10,000 shares were created. When a call of 
^1 per share on each of these was announced, as payable on May 2nd, 
those who were proprietors of the 2,400 old shares were informed that 
at the same time warrants for a dividend of 8^. per share were payable 
to them*. Subsequently there were reports of negotiations with the 
Sun Fire Office'', and the Prince of Wales became interested in the 
company®, with the result that the shares advanced rapidly. In the 
summer they were said to have been paid up to the extent of £5 or 
£5. 2^. 6d, and they touched 120^ The joint effect of having trafficked 
in its charter and also abandoned the trade, for which it had been 

1 Journals of the House of Commons, xvii. p. 444. 

2 London Gazette, No. 5161, Oct. 3, 1713. 

3 Ibid., No. 6167, Oct. 24, 1713. * Ihid., No. 5180, Dec. 8, 1713. 
^ Treasury Papers, cc. 32 ; Calendar, 1714-19, p. 235. 

* Post-Boy, April 14-16, 1720 ; Applehee's Journal, September 17, 1720, reprinted 
in Daniel Defoe : his life and recently discovered writings, by W. Lee, 1869, ii. p. 279. 

"^ Vide infra. Division xi. , Section 2 c. 

8 "The Prince and Princess descended to desire subscriptions in all ye bubbles. 
Copper, Lustring and I know not what and boasted of their gains," MS. ^' Second 
and Last Advice to ye Freeholders of England," 1721. 

* Anderson, Annuls of Commerce, in. p. 339. 

Div. vin. § 3] The Position from 1713 to 1720 


incorporated, for at least six years, caused the Lustring company to be 
one of those against which the celebrated writ of scire facias was issued 
in August 1720^ With the declaration of the invalidity of its charter 
in respect to its proceedings at this time, its title disappears finally. 

Summary of Capital and Prices of the Shares. 

£60,000, divided into 2,400 shares of £26 each, issued at £30. 

Prices of Shares. 


Date of highest price 


Date of lowest price 


April 14, 21 


May, June 


Jan. to June 


Sept. 13, 20, 27 


Jan. 4, 10, 17 


Dec. 5-26 


Oct. 4, Dec. 11 to end of 


Jan. 2, 9, 23, Feb., March, 


April and May till 23rd 


Feb. 5, 12 




Jan. to June 


Aug. 28 to Dec. 


Till April 




1 Cf. Part I., Chapter xxi. 

2 Or 38 if purchased by bank-notes. 


Though linen had been produced at an early period in England, 
all the finer qualities were imported until the Restoration. In 1669 
some French weavers, settled at Ipswich, had made linens which sold 
at 15^. per elP. As yet, however, the industry had not taken firm 
root, and a patent was granted to Charles Howard, encouraging him to 
manufacture fine linens^. Many years elapsed before he set to work. 
After the removal of the prohibition of the importation of French 
manufactures in 1685, there was a great demand for the products of 
that country. This was especially so in the case of fine linens. The 
quantity entered in the books of the Custom House in 1686 was valued 
at ci^398,611, and the average of the next three years is said to have 
been as much as c^700,000*'. The arrival of the Huguenots supplied 
the technical skill that had hitherto been lacking, and it was clear that 
there appeared to be an opportunity for a man of enterprize, who could 
command capital and was able to secure competent workers. Eustace 
Burnaby — who claimed to have an invention for white paper-making — 
came forward, and, on February 11th, 1687, he petitioned for a patent 
"for working and weaving superfine white thread and fine linen, commonly 
called bag-hoUands, diapers, damasks... and all other sorts which had not 
hitherto been made in England^." 

After the Revolution Nicholas Dupin, in association with Henry 
Million and a number of others, undertook to introduce the French 
method of bleaching and manufacturing fine white linen, and on May 
27th, 1690, they obtained incorporation as the Governor and Assistants 
of the King's and Qiceens Corporation for the Linen Manufacture in 
England. The charter recites that the founders of the enterprize had 

1 The Happy Future State of England, 1688 [Brit. Mus. 699 . k . 18], p. 267. 

2 MS. Rawl. A. 336, f. 40. 

3 The British Merchant or Commerce Preserifd, by Charles King, 1721, i. p. 319, 

* State Papers, Domestic, Petition Entry Book, lxxi. p. 317. With reference to 
Burnaby's connection vvith the paper trade, vide supra, p. 63. 

Div. vm. § 4] Floatation of the Corporation 1690 91 

at their own charges, both in foreign parts and at home, found out 
several profitable arts and mysteries, such as the art of preparing flax 
and hemp for making and weaving all sorts of cambrics, lawns, diapers, 
damasks, bag-hollands and other sorts of cloth, and the making of looms, 
heckles and other engines, not hitherto used in this kingdom, which are 
necessary for preparing the threads and weaving, working and bleaching 
the said manufactures. To encourage the corporation the sole privilege 
of exercising these inventions was granted to it. The governing body 
was to consist of a governor, deputy -governor and 15 or more assistants. 
The two former officials were "to be chosen out of the assistants and 
the latter out of the freemen of the company"" by plurality of votes. 
One vote was allowed for each share or " charge a member had in the 
joint-stock ^"''' 

The undertaking was divided into 340 shares, and these were sub- 
scribed by the members and their friends at d^lO each^ It would seem 
that ^3,400 should have been available as capital, but this was not so, 
since there was some outlay of the nature of preliminary expenses. Just 
at the time that Dupin and his associates were applying for a charter, 
Howard had begun "to set up the linen manufacture in the north"" 
under the patent he had obtained. According to his own account, he 
was approached by the two " mystery-men '"—Dupin and Million — with 
a view to his taking shares in the proposed corporation. Howard, 
" altogether disliking "*"* the idea, refused to join the projected company, 
whereupon Dupin offered him 20 shares, "acknowledged to be worth 
^5200,'' if he would appear before the Attorney-General to support the 
petition for the charter. On this basis the opposition was withdrawn, 
and the grant of incorporation was sealed^. No doubt, as in other cases, 
the promoters of the company received some consideration, either in the 
form of shares, issued to them without payment, or else out of the funds 
subscribed by the public. It follows that the corporation started business 
with very small resources, in spite of which energetic steps were taken to 
initiate manufacturing. Workhouses and warehouses were built*, while 

1 State Papers^ Domestic, Signet Office^ xii. p. 355 ; Ibid., Patent Roll, No. 3337 ; 
Proposals of the Gov" and Ass^^ of the Kings and Queen's Corporation for the Linen 

Manufacture in England Brit. Mus. ' ' . 

2 Proposals, ut supra ; MS. Rawl. A. 336, f. 40. 

3 Statement of Charles Howard of his part in carrying on the Linen Company 
with Nich. Dupin and Hen. Million, 1691, April 18 ; MS. Rawl. A. 336, f. 40. 
According to this account of Howard's, he refused to transfer his patent to the 
corporation, but it is recorded, in a petition of the governor and assistants (State 
Papers, Domestic, Will, and Mary, Petition Entry Book, i. p. 146), that a former 
patent had been purchased. 

* State Papers, Domestic, Will, and Mary, Petition Entry Book, i. p. 146. 

92 The English Linen Corporation [div. vin. §' 

Howard provided flax tools, engines, mills and looms, besides super- 
intending the sorting and spinning, also presenting the corporation with 
" his conveniency, friends and interest in the norths" The progress of 
the work and its prospects soon began to attract attention, and Narcissus 
Luttrell, writing on December 18th, 1690, says that " the new Linen 
corporation is much increased^." Such "increase"" related partly to the 
output of linens, partly also to the formation of an Irish linen company, 
on terms which were believed to be exceedingly beneficial to the English 
organization. Dupin was sufficiently astute to see that both Scotland 
and Ireland possessed considerable advantages for the linen industry, 
and he took steps to establish companies in each country. There is 
some doubt as to the original form of the scheme with regard to the 
relation of the three undertakings to each other. Inasmuch as they 
were finally organized as associated companies, with the English corpora- 
tion in the most important position, and since the governing body of the 
latter accused Dupin of "many unfaire practises'*'' at the inception of 
the Irish venture, it may be inferred that the intention of the inventor 
in 1690 was that the companies in each country should be mutually 
distinct and independent. The position at the end of the year was 
that the Scottish project had been temporarily withdrawn owing to the 
opposition of the Royal Burghs*, but that a charter had been signed on 
December 13th, 1690, for an Irish linen corporation, constituted in a 
similar manner to the body already established in England. The latter 
took the view that Dupin, besides being its deputy-governor, was bound 
by his agreements with it to supervise the process of manufacture accord- 
ing to his own secrets, and that therefore he could not fairly act in 
a similar capacity to another, and a rival company. The difficulty was 
overcome, for the time being, by an arrangement which was designed to 
protect the interests of the English corporation. Dupin, as promoter 
of the Irish undertaking, was to receive 100 shares of ^^5 each without 
being required to pay calls on them. On December 29th, 1690, the 
governor and assistants of the English company required that these 
vendor shares should be handed over by Dupin to them to be divided 
pro rata amongst the adventurers. This claim rested on the fact that 
Dupin was an official of the company and therefore the fruits of his 
work, in developing the linen trade, belonged to the corporation. The 
surrender of the vendor shares was agreed to by Dupin on April 4th, 
1691, subject to the qualification that he should be required to transfer 
only 85 of these, as he had already parted with 15 to " two gentlemen 

1 MS. Rawl. A. 336, f. 40. 

2 A Brief Historical Relation of State Affairs, ii. p. 147. 

3 Add. MS. (Brit. Mus.) 28877, f 109. 
* Vide infra, Division ix.. Section 4 c. 

Div. VIII. §4] Bonus in Shares of the Irish Co. 1691 93 

who had designed to take out a linen patent for Ireland." The scrip- 
bonus, procured by this arrangement, was very valuable. Each 
member of the English corporation, who held four shares, became 
entitled to one share of the Irish company. These latter at one time 
sold at from ^"^40 to ^50, so that, at that price, the bonus was one 
valued at about 100 per cent.^ Moreover a number of provisions were 
made which affected the output of the Irish corporation. The English 
organization was to act as its agent, receiving a commission for factorage 
and storage 2. It was alleged that the effect of these agreements was 
that the Irish company could only sell its linens in England, and that 
through the English corporation l A further agreement was made on 
the basis of certain proposals of Dupin's, the latter being dated April 
10th, 1691. These related chiefly to the devising of means by which the 
control of the Irish corporation should be divided equally between the 
English company and persons resident in Ireland who subscribed for 
shares in the former. Under this scheme the English body undertook 
to pay for one-half of any shares issued, while the Irish undertaking 
agreed to allot the moiety of such shares to the nominees of the English 

The benefit of this scrip-bonus, together with "the expectation 
of great profit," caused the shares to rise to a great premium ^ "The 
actions," in the words of a contemporary writer, " mounted apace," and 
the corporation, finding that it required further capital to carry on its 
operations in England and to take up its quota of the shares of the 
Irish company, offered to receive a new subscription at £50 per share ^. 
A considerable amount of this issue had been taken up by April 1691 ^ 
and the funds, so obtained, were employed in increasing the output 
of the company. Public sales were held by inch of candle at the " Old 
African House." At the third of these, on November 22nd, 1692, 
10,000 pieces were offered, divided into 600 lots, consisting of a consider- 
able quantity of white linen ("none having ever before been so well 

1 Vide infra, p. 100. It is not clear whether this scrip-dividend was distributed 
before or after the issue of further shares at 50. It seems probable that the latter 
was the course adopted ; if this was so, the value of the bonus per share would 
necessarily be less. 

2 Minutes of proceedings respecting articles to be inserted in the Charter of the 
Linen Corporation for Ireland, with the agreement thereto of the projectors, Dupiu 
and Million, 1690-1 ; MS. Rawl. A. 336, flF. 44-6. 

3 The Linen and Woolen Manufactory Discoursed, with the Nature of Companies 
and Trade in general, London, 1691, pp. 11, 12 (Advocates' Library). 

4 Proposals made by Nicholas Dupin to the Linen Co., April 10th, 1691 ; MS. 
Rawl. A. 336, f. 42. 

6 AnglicB Tutamen, 1695, p. 24. ^ Proposals, itt supra. 

'^ In MS. Rawl. A. 336, f. 42, in the course of a statement dated April 10, 1691, 
there is a reference to the "second subscribers." 

94 The English Linen Corporation [biv. vni. § 4 

whitened in this kingdom ""), many " locrums '' and " dowlas " and other 
white and brown linens. Purchasers, paying cash, were to receive 5 per 
cent, discount, those settling within a month 4 per cent. ^ 

Beneath this appearance of great prosperity, the corporation was 
exposed to a number of difficulties and dangers. In 1691 there was 
a quarrel between Dupin and Howard. The former had asked Howard 
to communicate his method of preparing flax, as the court had required 
that the secrets of manufacture should be explained to two of the 
assistants. This request was refused, and Howard complained that, after 
the ensuing quarrel, his life was " furiously sought."' He also alleged 
that Dupin and Million had confessed to him that they had no new 
inventions and that they feared they would be discovered to be " grand 
cheats." The other side of the tale represents Howard's conduct in a 
less favourable light. Dupin accused him of betraying the interests 
of the corporation, more especially in having endeavoured " to debauch 
them [i.e. Dupin and Million] from the service of the corporation to 
serve his own estate in the norths" The blame seems to rest with Howard, 
since fine linen was produced after he had retired from the company, and 
Dupin remained faithful to it all through its career. 

Only a few months afterwards friction arose with the Irish company 
which had bound itself to allot one-half of any shares issued to the 
English undertaking. On the floatation of the former, application was 
duly made by the court of the latter, and the specified deposit was 
tendered. But the governing body of the Irish company repudiated the 
agreement, declaring it "void and unreasonable." The English corpora- 
tion wrote a letter of remonstrance on September 18th, 1691, pointing 
out that if it became necessary to appeal "to the rigour of the law 
against the violators of the contract," " such a breach is like to happen 
as will turne to the damage, if not the utter ruin of the manufacture in 
Ireland 3." 

Further, the jealousy of the woollen industry had to be faced. It 
was alleged that the linen trade was "a despicable one," and that it 
required so much labour that it would withdraw workers from cloth- 
making. Gloomy pictures were drawn of the danger of the decay of the 
English staple trade through this cause, with a consequent reduction in 
agricultural rents. In 1691 a bitter attack was made on the corporation 
on these and other grounds. It was said that the formation of a com- 

1 London Gazette, No. 2810, Oct. 13-17, 1692. 

2 Statement of Charles Howard of his part in carrying on the Linen Co. with 
Nich. Dupin and Henry Million ; MS. Rawl. A. 336, f. 42. 

3 Letter of the King's and Queen's Corporation for the Linen Manufacture in 
England to the Governor of the King's and Queen's Corporation for the Linen 
Manufacture in Ireland; Add. MS. (Brit. Mus.) 28877, f. 109. 

Div. vm. § 4] Position and Prospects 1691-4 95 

pany was not a proper way to set up and increase manufactures. The 
very name of an incorporation was described as " a spell to drive away... 
all tnen of industry,'' especially those with a capital of <^500 or less. 
"Traders,'' the writer continues, "are like armies in the field, small 
parties, tho' numerous, give way to a united forced" 

The court soon found itself in want of capital. Not only were large 
sums required to purchase flax and pay wages, but also operations were 
being prosecuted vigorously in Scotland, although as yet no legal 
authorization had been obtained there. As early as June 1691 the 
governor petitioned the Crown for the privilege of raising wrecks off the 
south coast of England, " so that the linen industry should not sink for 
want of support during its minority 2" — a homoeopathic remedy of up- 
holding a sinking industry by the raising of foundered ships ! 

The quotation of the shares in the spring and summer of 1692 shows 
that the combination of friction within and attacks from without had 
resulted in a fall from the high price reached in 1691. During the 
earlier part of April they were over 40 and, for a fortnight, as high as 
42. Till June 10th there was a gradual relapse, 29 being touched on 
that day^, after which there was a recovery, and 38 was recorded on 
June 24th. During the remainder of the year the shares continued to 
advance, and in January 1693 they stood at 45. Thereafter the quota- 
tion was not below 40 until May. The development of the industry in 
Scotland was believed to be promising, and by this time Dupin had 
matured very ambitious plans for its further growth*. During the 
remainder of the year the price fell steadily until it was only 18 in 
December. This represented a premium of 80 per cent, on the original 
issue-price, and, in comparison with the high level reached in 1691, the 
quotation two years later suffered from the former being inflated by the 
share-bonus of that time. In 1694 there was some improvement and, 
for the months of February and April, the price stood at 22, relapsing 
however to 12 in June. At this time Houghton thought well of the 
prospects of the corporation "which," he wrote, "had caused many 
thousands of c^s to be spent in this country." It was expected that, 
with proper methods, its business would much increased In spite of 
this favourable verdict, the fall continued till 8 was touched at the end 
of September. It is most significant that this great depreciation in the 
price of the shares was contemporaneous with the progress of the 
formation and floatation of the Scottish company in the fonii that 
this scheme had assumed in 1694. The shareholders in the English 

^ The Linen and Woolen Manufactory Discoursed, ut supra, pp. 5-9. 

2 State Papers, Domestic, Will, and Mary, Petition Entry Book, i. p. 146. 

3 It is possible this quotation may be a misprint, in which case the lowest price 
would be 30, recorded on May 12. 

* Vide infra, Division ix., Section 4 c. ^ Collections, No. 99, June 24, 1694: 

96 The Eiiglish Linen Corporation [div. vin. § 4 

undertaking had bound themselves to subscribe one-half of the capital 
required for the Scottish enterprize up to dfi'l 5,000. Had this sum been 
demanded, it would have proved a crushing burden, involving the pro- 
vision of a larger capital for a subsidiary company than the parent one, 
in all probability, had been able to obtain. Indeed, had the proposed 
stock in the Scottish corporation been fully subscribed, it would have 
had at its command much larger resources than the English organization. 
This aspect of the scheme was interpreted as evidence that Dupin and 
the other prominent members of the company were less, hopeful than 
they had been a few years earlier, and the shares remained between £1 
and £H until the summer of 1697 when they fell to £b. 

At the end of 1695 the prospects of the corporation were not con- 
sidered promising. The author of AnglicB Tutamen says that " by 
degrees the reputation of this mighty manufacture sunk here and, I 
understand, is in a bad condition and will hardly hold up its head, 
much less advance any further \" About the same time the writer of 
an Essay upon Projects instances the linen company as one the shares of 
which were almost unsaleable, and which was likely to "come to 
nothing^.'" In a Report of the " Commissioners appointed to look 
after the trade of England," dated November 25th, 1696, it was stated 
that the condition of the company " was not so thriving as it might have 
been^."*' These different statements display a striking unanimity in 
attributing the decline in the position of the corporation to stock- 
jobbing. " All of a sudden," it is said, " some mean spirits fell to 
stock-jobbing and scared the easy and timorous and brought the 
actions down, and abundance sold off their shares, contented with 
their first profits, which were considerable, rather than attend the 
hazard of making greater in a little time, or losing some of the 
present*." It is obvious however that sales of shares by timid 
members would not be sufficient in itself to injure the credit of the 
company permanently, and, as a matter of fact, even when the shares 
were below par, a very extensive business was being done. Thus in 
1696 a single payment of .£'500 was ordered by the court to a merchant 
at Darlington for linen bought by the corporation ''. 

The steadiness of the market in the shares during 1695 and 1696 
shows that, though the great expectations, formed soon after the founda- 
tion of the company, had not been realized, it was carrying on a moderate 
business. Two new factors were now coming into operation which 
affected its fortunes very adversely. From 1696 the government had 

^ p. 24. 2 p 13^ s Journals of the House of Commons, xi. p. 595. 

* AnglicB Tutamen, p. 24. 

^ I am indebted to Miss Maud Sellars for copies of three bills of exchange, dated 
28 Feb., 26 June, 17 October, which she discovered at Darlington. These relate to 
transactions of this company, the amounts being £300, £500, £600. 

Biv. VIII. § 4] Manufacturing abandoned 1698 


decided to encourage the Irish linen industry, and such action would 
tend to weaken the position of the EngHsh corporation. Moreover, after 
the peace of 1697, French hnens could be imported, and it is clear that 
the company was unable to compete with the fine fabrics which were 
now coming into the country. In 1698 it is recorded that, while the 
corporation was still subsisting, it had no longer any looms at work, but 
contented itself with selling linens purchased from the weavers in Durham, 
Lancashire and Yorkshire ^ It follows that the undertaking had ceased 
to be a manufacturing enterprize, and that it had become a mere dis- 
tributing agency. Thus there was no justification for its special 
privileges, nor indeed was any benefit now obtainable from them, 
since these all related to the making of fine linens, which had been 
abandoned. It is significant too that, in a statement drawn up by 
Dupin about this time in which he urges the advantages of this in- 
dustry, he does not propose that the measures, he recommends for its 
encouragement, should be exercised through the corporation'^. 

There is no further mention of the business of the company after 1698. 
It is to be expected that, though it may have struggled on for a few years, 
it was soon compelled to wind up its affairs. In 1720, however, when 
application had been made for a patent for the production of linen, 
some of those who had been shareholders in this corporation appeared 
before the Attorney -General in order to oppose the proposed grant, but 
they were unable to show that the company had continued to exists 

Summary of Capital and Prices of the Shares. 


In 1690, 340 shares were issued at £10 each £3,400 

In 1691 a further issue of shares was made at £50 each. 

Prices of Shares. 


Date of highest price 


Date of lowest price 


April 6 

Jan., Feb. 8, March 15 
Feb. 7, April 11 
Jan. to July 6 

Jan. 6, March 30, April 28 






June 10 
Dec. 20, 27 
Sept. 26 to Dec. 
July 6 to Dec. 

Jan. 13, Sept. 1 

1 Report from Commissioners for Trade in Journals of the Home of Commons, 
XII. p. 435. 

2 Proposals of Nicholas Dupin, First Deputy-Governor of the Linen and Wtnte- 
writing Corporations in England, Scotland and Ireland [Brit. Mus. 8223.d.l7j. 

3 Caledonian Mercury, July 25, 1720. . • *i, 

4 Houghton gives a quotation of 103 on May 10, 1693, but, as the price m the 
week before and after is only 39, it is probably a misprint. 

S. C. III. ' 


The Governor and Assistants op the King's and Queen's 

Corporation for the Linen Manufacture in Ireland 

The Droghbda Linen Company (about 1691). 
The Calico-printing Patent of John Pons and others 

The Flax and Hemp Company of Ireland (1696). 
Linen Company founded by Louis Crommblin (1699-1700). 
The Governor and Company of the Cambric Manufactory 

at dundalk. 

The manufacturing of linens, as distinguished from the spinning of 
yarns, had not made much progress in Ireland by the middle of the 
seventeenth century. In 1641 the export of yarns amounted to 
2,921 cwt., valued at ^14,605 out of a total of .^393,811, and at 
that time there was no record of any finished linens being shipped. 
In 1665 the latter amounted to 522 pieces of 40 ells each worth 
^•590, while the yarn came to 3,477 cwt., rated at .£^7,385^ The 
Marquis of Ormonde made an effort to develope the trade by imJ 
porting foreign workmen, but this scheme, like his proposed shipping 
company and woollen enterprize, met with small success, owing to the 
poverty of the country rendering it impossible to raise sufficient capital". 
The first tendency towards an improvement however began to show 
itself— by 1669 the export of linen had grown from £590 to ^1,044 
and to ^6,000 in 1689^ 

The fact that so much yarn was exported, coupled with the presenci 
of a supply of skilled labour after the Revolution, suggested t 


^ A Note on the Export Trade of Ireland in IGJ^ly 1665 and 1669, by R. Dunlop in 
English Historical Review, xxii. p. 756. 

2 Life of the Duke of Ormonde, by Thomas Carte, 1736, ii. pp. 341-3. 

^ Eng. Hist. Rev., ut supra ; The Linen Trade, Ancient and Modem, by Alex. J. 
Warden, London, 1864, p. 397 ; New Essays on Trade, by Sir Francis Brewster, 
London, 1702, pp. 91-105. 

Div. vm. § 5] The Irish Linen Corporation 1691 99 

desirability of raising sufficient capital to utilize Irish yarn for the 
production of linen. In 1690, there were at least three schemes 
which aimed at effecting this object. Two of these — those of 
Nicholas Dupin and an independent group of promoters — sought to 
obtain a patent, while the remaining project was quietly matured, and 
those supporting it did not attempt to procure any exclusive privilege, 
but contented themselves with securing the necessary funds and making 
arrangements for commencing work at Drogheda^ Meanwhile, as has 
already been shown, the rival petitioners for a patent had come to 
terms, by Dupin undertaking to hand over 15 shares to the other 
group on their withdrawing in his favour I Accordingly, a warrant 
was issued for the incorporation of the Govei'nor and Assistants of the 
King's and Queens Corporation for the Linen Manufacture in Ireland on 
December 13th, 1691. The English company, finding that Dupin was 
to obtain 100 shares in the Irish undertaking, compelled him to hand 
over the balance he had intended to retain for himself, after transferring 
the 15 shares he had agreed to give the persons who had withdrawn their 
petition for a patent in his favour. Further, after a considerable amount 
of negotiation, agreements were made by both corporations, which gave 
to the English body the right of subscribing for one-half of any shares 
issued by the Irish undertaking and of exercising a certain amount of 
control over its business ^ 

The Irish corporation was organized on the model of the body 
already incorporated in England, and it was endued with similar 
privileges. The scheme was taken up with considerable enthusiasm in 
Ireland, and " many of the nobility and gentry were admitted, more for 
their countenance and favour to the project than for any great help that 
could be expected, either from their purses or their heads ^" The 
difficulty of obtaining capital was such that it was decided to make the 
shares of the denomination of £5 each. There were to be 1,000 of 
these, so that, when all had been taken up, the nominal capital would 
have been ^^5,000. There was a considerable amount of difficulty in 
deciding the number of shares to be issued in the first instance. The 
matter was debated at the court of the English corporation in April 
1691. It was first proposed that the quantity of shares, offered for 
subscription, should be the same as that at the inception of the English 
company, namely 340. It was feared by some that, in view of the 
circumstances of the case, the whole number offered might not be taken 

1 Letter of Wm. Molyneux to John Locke, September 26, 1696 ; Locke, Works 
(1727), III. p. 552. , 

2 Vide supra, p. 92. 
3/6id,p. 93. 

* Locke, Works, ut supra, iii. p. 552. 


100 The Drogheda Linen Company [div. viii. § 5 

up, and it was eventually agreed that the issue should consist of 
300 shares ^ To these are to be added 100 shares assigned to Diipin, 
so that the nominal capital at this date consisted of 400 shares, on 
which it was proposed to call up £^ per share. This subscription, 
which was taken in the spring of 1691, was characterized in a private 
letter of the period as much too meagre to attain satisfactory results. 
The industry was said to " go but slow, having but a small stock. It 
was nonsense from the beginning to give away 400 shares out of 1,000 
at iP5 a piece, who would put their money in such a stock^?"" With 
many persons, the fact of the small issued capital, coupled with the 
views that had been formed of the wide field that lay open for 
exploitation, created an urgent demand for the shares. It is recorded 
that " a great bustle was made about the business, many meetings were 
held, and considerable sums advanced to forward the work, and the 
members promised themselves prodigious gains, and this expectation 
prevailed so far (by what artifices I cannot tell) as to raise the value of 
each share to 40 or 50 pounds, though but five pounds was paid by eaxjh 
member at first for every share he had^" Workmen were employed 
and linen was being produced, when the corporation became involved in 
two disputes, the one with the parent body in England, already 
mentioned*, and the other with the company which had started manu- 
facturing at Drogheda. The latter had been established on "more 
equal terms " than had been obtainable in the case of the chartered 
undertaking, and " it throve very well at first'." The corporation, on 
hearing of this, took steps to enforce its monopoly, and eventually it 
compelled its rival to amalgamate with it. Meanwhile, in September 
1691 the dispute with the English body had come to a head ; and, as it 
progressed, the shareholders became discouraged, while " the work began|H| 
to flag and the price of the shares to lower mightily^." By the end of 
1691, or early in 1692, there was little hope that the corporation could 
be made a success, and it is probable that the attempt to manufacture 
was abandoned not long afterwards. 

For a few years there is no record of further developments in thi 
Irish textile industries, except for the grant of a patent for 31 yea 
to John Pons and his partners for a new invention of staining an 
stamping calicoes, linens and other fabrics, which was dated July 3r( 

* Proposals made by Nicholas Dupin to the Linen Co., April 10, 1691 ; MS. 
Rawl. A. 336, f. 42. 

2 Tobie Bonnell to James Bonnell, printed in Ulster Journal of ArchxRology^ ii, 
p. 197. 

3 Molyneux to Locke, Sept. 26, 1696 ; Locke, Works^ iii. p. 662. 

* Vide aupra, p. 94. 

^ Tobie Bonnell in Ulster Journal of Archceology , ii. p. 197. 
^ Molyneux to Locke, ut supra. 

Div. VIII. § 5] The Irish Flax and Hemp Co. 1696 101 

1693\ In 1696, however, an ambitious scheme was under consideration, 
which proposed the incorporation of a joint-stock body, under the title 
of the Flax and Hemp Company of Ireland, the capital of which was to 
be ^300,000'^. A contemporary critic of the Irish government wrote 
that all its other measures were "but trifles in comparison with the 
darling bill of the session, which was for the improvement of the Hempen 

and Flaxen manufacture, and this after H n of T re\s project 

for engrossing that trade into a few hands by a former bill was rejected 
and exploded. This was such a coup d'etat as would have infallibly 
ruined you at a stroke and have given the ministry a power of raising 
the whole money of the nation whenever they pleased, under the specious 
pretence of promoting a manufactured" 

There is a conflict of evidence as to the state of the fine linen trade 
in Ireland during the closing years of the seventeenth century. William 
Molyneux wrote in 1696, " I have as good diaper, made by some of my 
tenants nigh Armagh, as can come to a table and all other cloth for 
household use''." Louis Crommelin, who was afterwards "overseer" of 
this trade, stated that at this time the best linens produced in Ireland 
only realized \9>d. to 15^. per yard'. With the declaration of the 
House of Lords in 1698 (in which it was laid down as an axiom that the 
wealth of England depended on the woollen trade, whence it followed 
that this industry should be discouraged in Ireland) there came a change 
in the situation. It has been said that such action was mainly political 
— "Protestant linens were upheld and encouraged, whereas Popish 
woollens were suppressed*." This dictum, however, assumes that the 
woollen industry was almost wholly Roman Catholic, whereas there was 
a considerable body of Protestants engaged in the trade, who petitioned 
the Irish House of Commons as such''. Further, the production of linens 
was not then, as it is now, localized in the north but was carried on in 
the south and west also. 

The advancement of the cloth trade had long been accepted as the 
main feature of English commercial policy. This was the " heir," while 
all other industries were younger brethren or foster-children ^ Therefore 

1 Irish Patent Rolls, 6 Will, and Mary, No. 3. 

2 Add. MS. (Brit. Mus.) 27382, f. 8. 

3 A Short View of the Present State of Ireland written in 1700, by Dr Burridge [Lib. 
Trin. Coll. Dub.], p. 7. * 1-ocke, Works, iii. p. 552. 

6 Treasury Papers, x(!vii. 51 ; Calendar, 1702-7, pp. 411, 412. 

6 The Linen Trade, Ancient and Modern, by Alex. J. Warden, 1864, p. 392. 

7 State Papers, Four Courts, Dublin— Petitions to the House of Commons— CJase 
of tbe Protestant Woollen Manufacturers, Oct. 12, 1690. This petition asked that 
Papists should be " disabled " from working at the cloth trade. 

8 Extracts from Several Mercatm-s, being considerations on the State of British Trade, 
1713, p. 9. 

102 Crommelin's Linen Company 1699-1700 [div. viii. § 5 

it seemed natural to most of the statesmen of the period that "they, 
like their fathers, should be very jealous'' of the establishment of rival 
woollen manufactories. But, though Irish cloth-making was to be dis- 
couraged, there was not to be an absolute loss to the country, since it 
was to receive compensation in the development of the linen trade. The 
arrangement made was in effect an anticipation of the commercial 
clauses in the treaty of union with Scotland, and, in the language of the 
latter, the linen industry was to be " the equivalent^ " to Ireland for the 
check imposed on its making of woollens. From one point of view there 
was an exchange of a certainty for a possibility, from another the scheme 
aimed at " a territorial division of labour," in concentrating the labour 
of Ireland on a trade for which the country possessed great natural 
advantages. A further aspect of this equivalent was the assistance 
which England gave towards the improvement of the linens, produced 
in Ireland. This took the form of a bounty provided by England to 
encourage expert producers, who would settle in the country and com- 
municate their secrets to native apprentices. Many of these instructors 
were Huguenots, one of the most prominent of whom was Louis 
Crommelin. He settled near Lisburn, and others of his compatriots 
established themselves at Waterford and elsewhere in the south. J 
Crommelin was admitted to participate in the bounty on the following " 
basis. It was calculated that the capital value of the machinery and 
stock, he proposed to establish, was ^^1 0,000 — his looms being valued at J 
d£^30 to £50 each. It was further provided that any additions to the t 
plant should be valued on the same basis. Then, on the total so arrived 
at, 8 per cent, interest was to be paid as if the capital had been lent to 
the State, in addition to which ^380 a year was assigned to him to . 
provide salaries for his assistants and for ministers ^ Crommelin ex« 
pressed himself as being averse to trading companies — " I have always 
observed," he wrote, " in France, Holland and Flanders that corporations 
set up to regulate trade and commerce do more harm than good'." 
Possibly this remark refers to a large and unwieldy body like the King's 
and Queen's corporation, for Crommelin's own colony had many points 
of contact with a joint-stock company. In the form in which th« 
proposition was under consideration in 1700, the stock was to 

* This term was in common use in the time of Charles II., vide The Anatomy oj 
an Equivalent, reprinted in State Tracts being a Collection of Several Treatises Eelatii 
to the Government privately printed in the Feign of Charles II., 1693, ii. p. 300. 

2 Treasury Papers, lxxxiii. 104 ; Calendar, 1702-7, p. 96 ; Precedents and Abstract 
from the Journals of the Trustees of the Linen and Hempen Manufactures of Ireland 
the 25th of March 17S7, by James Corry, 1784 [Linen Hall Library, Belfast], p. 4. 

* An Essay towards improving the Hempen and Flaxen Manufactures in the Kingdom 
of Ireland, by Louis Crommelin, 1705, p. 24. 

Div. VIII. § 5] CromnielMs Linen Company 1700-11 103 

provided by Crommelin "and his friends i/' In some cases it appears 
that the emigrants, who came with him, provided looms or other 
property, and thus they ranked as shareholders in respect to the sub- 
sidy of =£^800, paid by the English government. Further, since many 
of them were also engaged in the actual process of manufacture, there 
was a co-operative element in the management of the business. This 
weaving industry was one of the most successful of those established 
in Ireland by the Huguenots. Crommelin claimed in 1706, that the 
quality of Irish linen had been so much improved that it realized 8*. to 
9*. a yard, as compared with only l^d. or 15c?. before his enterprize had 
been started. He mentions too that overtures had been made to him 
to remove to Kilkenny, with a view of effecting a similar improvement in 
the methods obtaining there I On the establishment of the trustees for 
the linen manufacture, the bounty of <£'800 a year was transferred to 
this body, as part of its revenue, and in 1711 Crommelin stated that his 
share of it had been reduced to ^400 annually, which produced " not 
3 per cent, interest instead of 8 per cent.^" He had already been 
appointed " overseer of the Royal linen manufacture " with a salary of 
<^200 a year, and in 1717 the trustees recommended that he should be 
" encouraged,"' whereupon he was granted a pension of £4>00 a year*. 
He died in 1727. 

There was a considerable amount of opposition to the encourage- 
ment of the linen industry. Archbishop King, writing in 1705 of one 
of the many bills to aid this trade, says that " the clergy's party is most 
shamefully invaded, and half their tythes given away without sense or 
reason... sacrilege is an ill way of improving manufactures ^'' Swift, for 
political reasons, became a bitter opponent of the linen industry and a 
supporter of Irish woollen manufactures. Under cover of an allegory, 
Ireland was compared to Arachne, condemned " to spin and weave for 
ever out of her own bowels and in a very narrow compass ^^ In the 
Story of an injured Lady similar charges are made in a somewhat 
scurrilous form''. Swift himself was forced to admit (and indeed devotes 
considerable ingenuity in endeavouring to explain away) the phenomenon 
of a pronounced rise in rents through land being converted from tillage 

^ Journals of the House of Commons, xiii. p. 299. 

2 Treasury Papers, xcviii. 51 ; Calendar, 1702-7, pp. 411, 412. 

3 Precedents and Abstracts, ut supra, p. 4. * Ibid., p. 23. 

^ MS. Letters of Archbishop King, Library, Trinity College, Dublin (under 
April 28, 1705). 

8 A Proposal for the Universal Use of Irish Manufacture, written in 1720 in Swift, 
Works (ed. 1762), iv. p. 24. A reply appeared, entitled An Answer to the Proposal 
for the Universal Use of Irish Manufactures, Dublin, 1720. 

"^ Works, IV. p. 255. 

104 Irish Linen Trade 1700-26 [div. vm. § 5 

to sheep farming ^ One cause, which may have aided this prosperity of 
the grazing industry, was the prevalence of smugghng wool both to 
France and Scotland I Meanwhile the linen trade was progressing 
rapidly. It was said by Swift, though doubtless with some exaggeration, 
that, by what he describes as " the detestable fraud of the merchants or 
northern linen-weavers or both,*" trade to the value of <£*300,000 a 
year in this commodity with Spain alone had been lost^ Further 
evidence towards the progress of the industry is to be found in the 
establishment of an undertaking described as the Governor arid Company 
carrying on the Cambric Manufacture at Dundalk in the second quarter 
of the eighteenth century ^ Such statistics as are available show that, 
while there was a very slight decrease in the exports of wool and 
woollen yarn as between 1697 and 1726, there had been an immense 
increase in those of linens, as will be seen from the following sum- 
mary^ : 

1697 1726 

Exports of linens and linen yarn £59,891 £342,295 

„ wool and woollen yarn £117,155 £107,559 

1 An Answer to a Paper called a Memorial of the Poor Inhabitants. ..of Ireland, 1728, 
Works, IV. pp. 289, 291. 

2 Thomas Knox to Secretary Southwell, Feb. 3, 1704, Southwell Papers, Four 
Courts, Dublin. 

3 A Letter to the Archbishop of Dublin concerning the Weavers, Works, xii. p. 209. 
* Petitions to the Irish House of Commons, Four Courts, Dublin, Petition of 

Dundalk Cambric Manufacture, Nov. 7, 1739. There are references to this enter- 
prize in The Journals of the Royal Historical and Archceological Association of Ireland, 
Third Series, i. pp. 7-20, Fourth Series, iv. pp. 139-41. 

^ New Essays on Trade, by Sir Francis Brewster, London, 1702, pp. 102-3 ; An 
Essay on the Trade and Improvement of Ireland, by Arthur Dobbs, Dublin, 1729, 
pp. 18, 19. 


The Company interested in the Manufacture and In- 
vention OP Milled-Lead (1670). 

The Dipping Company (1691-2). 

The Company formed to work the Patent of John 
Stapleton for making brass for Ordnance (1691). 

The Governor and Company for casting and making 
Guns and Ordnance in Moulds op Metal (1693). 

The Venetian Steel Company (? 1692). 

It has already been shown that one of the early objections to the 
East India and other distant trades, especially to tropical countries, 
was "the spoil of shipping^" The timber of the ships suffered 
from the ravages of certain marine organisms, and efforts were made to 
lengthen the life of the vessels, by " paying the hulls from the water's 
edge, downwards, with stuff and laying the inside of a sheath ing-board 
(from inch and a quarter to three-quarters thick) all over with tarr 
and hair, to be brought over the fore -mentioned stuff", and being well 
nailed, graving or paying the outside of the said board all over with 
another composition of brimstone, oil and other ingredients ^'^ The 
objections to this method were the cost of the frequent renewals in- 
volved and also the diminution in the speed of the ships that had been 
sheathed in this manner. Not long after the first Dutch war in the 
reign of Charles 11. , a new invention was discovered which, it was 
thought, would be free from these inconveniences. For some time lead, 
reduced by casting to a suitable degree of thinness, had been used for 

1 Vide supra, ii. pp. 101-2. 

2 A Deduction of the whole matter relating to the Lead-sheathing of his Majesty's Ships 
in An Account of Several New Inventions and Improvements now necessary for England ; 
The New Invention of Miir d-Lead for Sheathing of Ships against the Wm-m, better for 
Sailing and cheaper above cent, per cent, than the old Way with Boards [by T. H.], London, 
1G91, p. 36. 


106 The Milled- Lead Company 1670-5 [div. vm. § 6 

the roofs of buildings. Siich sheet-lead, owing to its inequalities, 
would not be suitable for the sheathing of ships, but it was thought ^ 
that, if lead could be produced in sheets, all of the same thinness, the fl 
problem would be solved. Instead of casting the lead, it was proposed 
to roll it into sheets, and hence this process was termed " the milling of 
lead " and that produced was called "■' milled -lead.'"* At this stage the 
introduction of capital became necessary, and Sir Philip Howard and 
Francis Watson, who were interested in the invention, sought for the 
encouragement of Parliament, from which an act was obtained in 1670, 
granting the promoters and their partners the sole use of the invention 
for a period of twenty-five years \ In order to provide funds and to 
determine the financial relations of the members of the company, the 
undertaking was divided into twelve shares ^ 

Milled-lead was soon made, and the company was able to show 
favourable estimates of the saving that could be effected by its adoption. 
It was calculated that, taking the time the sheathing was likely to last, 
and allowing for the value of the lead when it was removed, there would 
be an economy of 150 per cent, as compared with wood I These figures, 
together with specimens of the sheets, were submitted to Charles II., 
and by his directions the Phwnix was equipped with the new sheathing. 
According to the account of the company, after three years' trial, the 
timbers underneath the lead were examined with such satisfactory results 
that the King ordered that the ships of the Navy " may for the time to 
come be sheathed in no other manner than that of lead ^"" 

At this stage, when it appeared that a profitable business was open- 
ing before the company, there was obstruction from persons interested 
in the old method which was now in danger of being displaced, and it 
was not till 1675 that a contract between the Admiralty and the 
company was concluded ^ Though the opposition to the company's 
invention had been temporarily suppressed, it was not ended. As the 
ships, which had been sheathed with lead under the contract of 1675, 
returned from service there were many complaints of the composition of 
the rolled-lead, which was said " to be of a cancarous and corroding 

^ An Act for granting unto Sir Philip Howard and Francis Watson j Esq., the sole Use 
of a Manufacture, Art or Invention for the Benefit of Shipping, in Account of Several New 
Inventions, p. 5. 

2 The Humble Memorial of Sir Philip Howard and Company interested in the Manu- 
facture and Invention of Milled-Lead [? 1683], in Account of Several New Inventions, 
p. 68. 

8 Ibid., p. 67. 

■* Order from the Commissioners of the Admiralty December SO, 167S, in Accomd of 
Several New Inventions, p. 7- 

^ A Deduction of the whole Matter relating to the Lead-sheathing of his Majestx/s 
Ships, in Account of Several New Inventions, pp. 8, 9. 

Div. viii. § 6] The Milled-Lead Company 1678-95 107 

nature and venemous to iron," destroying the rudder-posts and other 
iron-work \ ITiere was an enquiry, as a result of which the company 
undertook in 1678 to contract for the maintenance of rudder-irons in 
lead-sheathed ships at rates not in excess of those paid up to this time^ 

When the controversy was in this state, there arose " some difference 
between the partners themselves, which gave an interruption to their 
proceedings^" ITie dispute occasioned a considerable delay, and the 
company next shows signs of activity in 1686, when it proposed a new 
basis of contract which provided for the sheathing of ships of the Navy 
at a fixed sum per foot square, which rate it was claimed was half that 
for wood-sheathing''. This proposal was not accepted, as appears from 
the complaint made in 1690 that the use of milled-iead had been by 
then discontinued in the Navy^ The loss of Admiralty contracts 
discouraged the shareholders in the company. They had been at con- 
siderable expense. According to one account, the mill, they had 
erected, cost ^2,000^ They were without prospects of an immediate 
return on their outlay and, about the time of the Revolution, they had 
the opportunity of disposing of their property to two brothers, Thomas 
and Charles Hale. The sale was carried through, and thus the milled- 
lead undertaking is an interesting example of a reversion from manage- 
ment by a company to that of a partnership. 

The subsequent history of the undertaking may be briefly outlined. 
The Hales began by endeavouring to press the sale of rolled-lead for 
roofs of buildings as well as for cisterns, fountains, pipes and vessels for 
brewers''. They succeeded in regaining the confidence of the Admiralty, 
and about 1692 contracts for the sheathing of ships were again ob- 
tained^. Once more opposition manifested itself. When the plumbers 
found that the substitution of milled-lead for sheet-lead was affecting 
them, they became " the mortal foes of the Hales." Complaints were 
made to the Navy -Board, and this body asked for explanations from the 
Hales ^ Further, on the determination of the monopoly in 1695, 

1 Account of Several New Inventions, pp. 17-23, ^ Ibid., p. 24. 

3 A Proposal of Mr Kent and Partners concerned in the Work of MiWd-Lead, in 
Account of Several New Inventions, p. 65. ^ Ibid., p. 69. 

^ An Advertisement to all who have Occasion to make use of Sheet-Lead [by C. Hale, 
1690], in Account of Several New Inventions, p. 99. 

State Papers, Domestic, Petition Entry Book, iii. p. 269. 

7 An Advertisement to all who have Occasion to make use of Sheet-Lead, in Account of 
Several New Inventions, ^. 99. 

8 State Papers, Domestic, Petition Entry Book, in. p. 269. 

» An Advertisement, shewing that all former objections against the Mill'd-Lead 

sheathing have been answered by the Navy-Board themselves, Lend. 1696 Brit. Mus. 

816 . m . 7 


108 The Dipping Company 1691 [div. vni, 


another rolling-mill was erected, the proprietors of which entered on a 
vigorous campaign of cutting of prices. They tendered to the Navy for 
sheet-lead at Qs. per cwt. below the cost of production, with the avowed] 
object of driving the Hales out of the trade, whereupon, according to 
the tale of the latter, quotations would be advanced. The Hales asked 
consideration from the Admiralty in view of the fact that up to 
December 31st, 1701, they had saved the Navy £\0<i)00\ It would 
appear that the older firm had not given satisfaction, since about this 
time it had to adopt an apologetic attitude in reference to the sheathing 
of the Rising Eagle ^ and between 1700 and 1702 the energies of the 
proprietors were directed towards the popularizing of their lead for other 
purposes 2. 

Besides the milled-lead invention there were several other schemes 
for new or improved manufactures in metals. In 1694 Houghton 
mentions a Dipping Company which was founded on a patent. 
The grant alluded to may have been that to John Stapleton on 
November 28th, 1691, for making white and yellow metal, whereby 
the expense of using gold and silver for gilding could be saved ^ 
The shares of the company, which acquired this patent, were quoted 
at 17 in 1692, and are mentioned by Defoe in his list of those that 
had been stock -jobbed to a very great premium, and which afterwards 
became valueless, whereby many families were ruined^. 

In 1691, on August 31st, Stapleton and Gustavus Adolphus van 
Baudivin petitioned for a patent for a new method of mixing brass, 
which would enable guns to be produced more cheaply than ever 
before °. A warrant for a patent was granted on September 24th ^, 
and it seems that this is the patent, owned by a company, associated 
with the name of Stapleton, which however Houghton classes under the 
heading of " saltpetre companies ''.'^ Inasmuch as there is the same diffi- 
culty about a company in the same class promoted by Dockwra and 
since there is no grant to either Stapleton or Dockwra for making salt- 
petre, it may be inferred that these two companies were intended to 

^ State Papers, Domestic, Petition Entry Book, iii. p. 269. 

2 A Short Accompt of the first Motives and Reasons for the Miird-Lead Sheathing, its 
Excellency, 1700 [Brit. Mus. T 100 (221)] ; A Second Advertisement, relating to Lead- 
Sheathing upon the Rising Eagle, 1700 Brit. Mus. ' ' ; An Advertisement to 

all that are concerned in the Use of Sheet Lead, demonstrating... that Cast-I^ead for 
covering of Churches.. .is worse and... dearer than MiU'd-Lead, 1702 [Brit. Mus. TlOO* 

3 State Papers, Domestic, H. O. Warrant Book, vi. p. 229. 
* Essay upon Projects, 1697, p. 13. 

^ State Papers, Domestic, Petition Entry Book, i. p. 183. 
« Ibid., H. O. Warrant Book, vi. p. 193. 
'' Vide Plate, vol. i. 


Div. VIII. § 6] Ordnance and Steel Companies 1691-3 109 

produce ordnance, and the heading in Houghton's list was meant to 
have been "Saltpetre and Gun Companies." Dockwra's company was 
based on the invention of Thomas Puckle, to whom a warrant for a 
patent was granted on March 17th, 1693, for the casting of great guns 
in moulds of metals By August 11th, 1693, Puckle, Dockwra and 
Richard Povey stated that, after great expense, the invention had been 
brought " to perfection,'"* but that the undertaking was too considerable 
to be carried on without a very great stock, and they therefore petitioned, 
on August 11th, 1693, for incorporation as the Governor and Company 
for the casting and making of Guns and Ordnance in Moulds of MetaP. 
Either this or a later invention of Puckle's was one of the schemes of 
the year 1720, when the £4t shares were quoted at £H^. 

Thomas Neale did not confine himself to wreck-recovery projects*, 
but also secured patents for several improvements in the working of 
metals. In 1692 he and John Tyzack obtained the usual privileges for 
the making of steel which was to be equal in quality to the best 
Venetian steeP, and on June 6th of the following year he petitioned, 
again in conjunction wdth Tyzack, for a patent for making screens with 
iron-wire*. Like most of Neale's projects, the invention for steel- 
making was transferred to a company, but, probably like the rest of 
those promoted by him, it was a failure. In fact Neale is in all 
likelihood the dishonest promoter, whose schemes are strongly con- 
demned by Defoe and the writer of Anglice Tutamen. 

There was another company, engaged in work connected with the 
steel trade — the Sword Blade company — but as the making of swords 
was only an incident in its history, the charter having been used to 
cover three distinct businesses at different times, the account of this 
enterprize may be dealt with more conveniently with others of a like 
nature ^ 

* State Papers, Domestic, H. O. Warrant Book, vi. p. 520. 

2 Ibid., Petition Entry Book, in. p. 5. 

3 Anderson, Annals of Commerce, m. p. 341. * Vide supra, ii. p. 488. 
^ State Papers, Domestic, Signet Office, xii. p. 601. 

« Ibid., Petition Entry Book, ii. p. 337. 

Vide infra J Division xii.. Section 3. 



The Company of Glass-Makers of London (1691). 
The Glass-Bottle Company (1694). 

About the time of the Revolution the manufacturers of glass 
complained that their trade had declined. This was alleged to be 
due to dissensions amongst the owners of glass-houses and " to want 
of good government"' in the industry^ Accordingly, on October 7th, 
1691, a warrant was signed for the incorporation of a number of the 
glass-makers about London and Southwark, as the Master^ Wardens^ 
Assistants and Company of the Glass-MaJcers in and about the Cities 
of London and Westminster. This body, from its constitution, was 
clearly intended to be a regulated company, though it is interesting 
to notice that powers were given to raise a stock 2. About the same 
time there was another organization of a similar character known as 
the Company of Glass and Earthenware Sellers^. 

The prohibition of trade with France gave a temporary stimulus to 
the production of the finer grades of glass. Several patents were 
sought to protect processes that were expected to make such kinds as 
had been previously imported; and, when John Houghton began to 
print his list of stocks and shares in 1692, he includes the price of 
the securities of a glass company. This enterprize was promoted by 
persons already interested in the glass trade, and amongst them was 
Robert Hookes, who, with C. Dodsworth, had obtained a patent for 
making improved window glass, red glass and plate glass in 1691 ^ 
Whether this patent was transferred to the joint-stock undertaking or 
not, in a petition from the company dated February 2nd, 1693, its 
objects are described in precisely similar terms ; and it was claimed that 
sheets, both for windows and mirrors, had been made better, finer and 

1 State Papers, Domestic, Petition Entry Book, i. p. 200. 
'^ Ibid., H. O. Warrant Book, vi. pp. 197-9. 

2 Reasons humbly offered by the Company of Glass and Earthenware Sellers, in 
Answer to the Pot-Makers printed Reasons for their Bill, now depending in this 

Honourable House, ?1698 Brit. Mus. '^' . 

* State Papers, Domestic, Petition Entry Book, 11. p. 255 ; H. O. Warrant 
Book, VI. p. 60. 

Div. vm. § 7] The Company of Glass-Makers 1691 111 

more lustrous than ever before or than could be accomplished in any other 
part of Europe. The proprietors now numbered 120 and had raised 
a capital of ^25,000. They asked to be incorporated as the Company 
of Glass-Makers of London, but, as far as can be gathered, without 
success \ 

In 1692 and 1693 there was a somewhat active market in the shares. 
They are first quoted on IVIarch 30th at 28. A fortnight later the 
price was 43; and, after a temporary relapse, this figure was again 
reached on May 26th. During the remainder of the year the quotation 
gave way, and on January 18th, 1693, they are recorded as being 34, 
whence they fell, almost without a recovery, till April 11th, 1694, when 
the price was 11. This is the last occasion on which they appear in 
the list. 

Very soon after the disappearance of the record of fluctuations in 
the shares of the company of Glass-makers, those in the Glass-bottle 
undertaking begin to be quoted. This enterprize was an attempt to 
provide a satisfactory substitute for the " stone '' or earthenware bottles 
in common use. Its objects may be gathered from the specification of 
a patent obtained by Philip Dallows, one of the masters of the green 
glass-works in 1689, and which may have been the concession this 
company was formed to develope. The invention of Dallows, in 
addition to providing a method for making "grenado shells'' of 
glass, aimed at making bottles " sealed quarts or pints or any other 
exact size 2/' 

Though the shares of the company of Glass-makers had been 
excluded from Houghton's list in April 1694, he had a good opinion 
of its prospects. Writing in July of the same year, he states that the 
Glass and Glass-bottle companies " had stock enough greatly to increase 
trade ; by them," he continues, " our windows and looking glasses much 
out-do what was done before by ourselves or neighbours I" The author 
of Anglice Tutamen, on the other hand, instances the Glass-bottle 
undertaking as one which was in danger " of coming to nothing through 
falling into stock-jobbing ^" Certainly, the decline of the shares from 
24 on August 15th, 1694, to 15 a week later might be taken to point 
to some such conclusion, but it may have been that there were already 
rumours of the adverse legislation which became a reality in the following 
year. It was of a very burdensome character, imposing a war- tax of l.y. 
per dozen on all bottles containing a quart, other than those of Hint 
glass. Pints paid half the duty, and smaller sizes in proportion. 
Window glass was rated at 10 per cent, ad valorem, flint glass and pkite 

1 State Papers, Domestic, Petition Entry Book, i. p. 422. 

2 H)i^ ^ Petition Entry Book, i. p. 57 ; H. O. Warrant Book, xvi. p. 160. 

* p. 21. 

112 The Glass-Bottle Company 1694 [div. viii. § 7 

glass at 90 per cent., and air other kinds at 15 per cent. These taxes 
were levied on the quantities made, not on what was sold^ 

The effect of this act was immediate and distressing. The glass- 
makers, who produced the inferior kinds of glass, suffered most. Shares 
in the Glass-bottle company fell from 15 to 7, while the manufacturers 
stated that, in six months, since the tax had been levied, some had been 
able to keep their works going eight weeks, others four weeks, some not 
above two weeks ^ Houghton's reference to the companies, engaged 
in the glass trade at this time, shows that their fortunes had changed 
for the worse. "Whatever may be said,"" he writes, "against stock- 
jobbing yet it has been the means to raise great sums of money to 
improve this art, and seldom is so much money laid out in the kingdom 
to encourage any trade but the public is the better — whatever the gain 
or loss to the projectors may prove, caveat emptor^.'''' 

It was the contention of the manufacturers that the tax could not 
be shifted to the consumer. Since similar duties were imposed on 
imports, it would appear that the tax should not have been so burden- 
some as was alleged by the glass-makers. The evidence of the workers 
shows that there was a lack of employment, the great majority having 
to subsist on poor-relief. Two causes may be assigned for the stagnation 
in the industry. The duty was assessed on the goods made. In this 
industry, where breakages were many, the tax for this cause, in some 
cases, came to 100 per cent. Under such circumstances, where the 
demand was elastic, it would follow that the consumption would be very 
greatly reduced and that the manufacturer would have to bear the 
greater part of the burden. There was, however, another reason con- 
tributing to the difficulties of the trade. Some of the makers, finding 
they could not sell their glass, " paid " it to their hands in satisfaction 
of the wages due*. This was a short-sighted policy. The workmen 
could not hold the stock they had been forced to acquire, and they 
hawked it through the country, with the inevitable result of spoiling 
the market. Thus it was said with some reason "that the glass- 
makers were themselves chiefly the occasion of the stop of the 

1 Statutes, VI. pp. 600, 601. 

2 Journals of the House of Commons, xi. p. 639. The act came into force on 
Sept. 29, 1695, the petition was received on March 30, 1696. 

3 Collections, No. 181, Jan. 17, 1696. 

* Journals of the House of Commons, xii. pp. 281, 282. 

^ The Allegations of the Glass-Makers Examined and Answer'd Brit. Mus. 

^^ — . In this account the total number of workmen in all the glass-houses 

135 J 

in England is given as 800. This seems to be an under-estimate. 

Div. VIII. § 7] Glass Companies 1698-1705 113 

After some experience of the impost it was found that the produce 
of the tax was much less than had been expected, indeed the nett 
amount paid into the Exchequer up to August 1698 amounted only 
to dfi'l 3,500 \ More than this was due, but the manufacturers had been 
unable to pay the money, and the Commissioners had been forced to 
accept their bonds ^ Moreover, through many of the glass-works being 
closed or working only a few weeks in the year, the consumption of coal 
was lessened, and the Revenue lost the proportionate proceeds of the tax 
on this commodity. For these reasons in 1698 half the duty on glass 
was abated and the whole of that on stoneware, while in the following 
year the remainder of the tax was remitted I 

It was the makers of the cheaper kinds of glass who suffered most. 
Whether the Glass-bottle company was able to survive till the duty was 
repealed is doubtful. Its shares were last quoted, by Houghton, in 1696, 
but their removal from the list is not decisive evidence that the under- 
taking was wound up, since, at the end of that year, he greatly com- 
pressed the space devoted to stocks, only retaining the names of those 
ventures in the securities of which there was a wide and active market. 
If, as seems possible, Dallows was one of the promoters and prominent 
members of the company, it is significant that he appeared at the inquiry 
as to the effects of the duty and that, while admitting that the trade in 
bottles was reduced owing to the war, he expressed himself fairly well 
satisfied with the position of the industry ^ 

The company of Glass-makers undoubtedly continued to exist until 
after the removal of the tax. In February 1700 it was carrying on 
business at the Old Glass-House in Foxhall, known as the Duke of 
Buckingham's House, where it had several large mirrors for sale. It 
is noteworthy that divisions in kind were made to the members, since it 
was advertized that " several of the glass proprietors had not taken their 
dividends of glass," which they were requested to remove at an early 
date as the company's lease of the warehouse it was then occupying had 
expired^ If the theory that this undertaking was based on a patent, 
obtained about 1691, be well founded, it is not improbable that the 
company survived until the term of that grant had expired in 1705. 

1 Journals of the House of Commons, xii. p. 628. 

2 Ihid., XII. p. 282. 

3 9 and 10 WiU. III., c. 45 ; 10 and 11 Will. III., c. 18. 

4 Journals of the House of Commons, xii. p. 282. 

5 Postman, Feb. 13, 1700. 

S. C, III. 


Glass Companies 1692-6 [div. vm. § 7 

Summary of Capital and Prices of the Shares. 

Capital The Company of Glass-makers. 
(1693) £25,000. 

Prices of Shares. 
The Company of Glass-makers, The Glass-bottle Company. 


Date of 
highest price 


Date of 
lowest price 

Date of 
highest price 


Date of 
lowest price 


April 8, 
May 26 


Mar. 30 


Jan. 18 


Nov. 15 to 


Jan. 10 


April 11 

Aug. 15 


Aug. 22 to 


Jan. to 
March 1 


March 8 
to Dec. 




The Annuitants and Sharers in the Beech Oil Company; 
The Governor and Company for Making and Vending 
Beech Oil (1714). 

One of the directions in which invention showed itself after the 
Revolution was in mechanisms for the extraction of vegetable oils. Thus 
in 1696 George Capstack presented a petition for a patent "for his 
engine or mill, with iron and wooden rollers, for making oil from all 
manner of seeds, in less time and greater quantity, with more advantage 
and less labour than any now in use^." In 1708 a somewhat similar 
claim was advanced by Robert Pease of Hull, who undertook to extract 
oil from native materials chiefly ^ Then on June 6th, 1713, Aaron Hill 
declared that he could obtain " a sweet, pure and wholesome oil from a 
certain vegetable of Great Britain ^'^ The "certain vegetable" of this 
petition was the seed of the beech-tree, whence HilFs project was 
generally described as " the beech-oil invention."" A patent was 
granted to Hill on the 13th of October following, and he adopted 
an ingenious method of raising capital to develope his scheme. On 
January 5th, 1714, books were opened at the Oil-Annuity Office, 
against the upper end of Montague Street in Great Russell Street, to 
receive subscriptions from those who were prepared to support the 
venture. Persons, who paid in ^^20,000 at the Oil Office, were to 
receive annuities of no less than 50 per cent, for the ensuing 14 years^ 
On the 21st of the same month the whole amount had been taken up', 
but it was not long before some of the annuitants began to repent of 
their bargain, since they did not see any preparations being made to 
earn an income, from which the sums promised to them could be paid. 
Whereupon Hill offered to return the money subscribed by those who 

1 State Papers, Domestic, Petition Entry Book, in. p. 155. 

2 Ihid., VII. p. 379. ^ I^i<^-> xiii. p. 119. 

* An Impartial Account of the Nature, Benefit, and Design of a New Discovery and 
Undertaking to make a pure, sweet and wholesome oil from the fruit of the Beech Tree, by 
Aaron Hill, 1714 [Brit. Miis. 1029. d. 26]. 

5 The Insurance Cyclopcedia, by Cornelius Walford, London, 1871, i. p. HO. 


116 The Beech Oil Company 1714-15 [div. viii. § 8 

were dissatisfied, and annuitants who had paid in £bfiOO withdrew, 
leaving £\5fi00 as the total at this date\ 

According to HilFs account, it was impossible to start the under- 
taking until the next autumn. In order to provide the first half-yearly 
payment to the annuitants, a new development was announced on 
March 1st, 1714. This took the form of establishing a company to 
which the patent was to be assigned. The capital was divided into 
5,000 shares which were to be issued at five guineas each, this sum was 
payable to Hill as the vendor. Each share was charged with a liability 
of 30,9. annually to make good the sum reserved to the annuitants, while 
working capital was to be obtained by calling up c£*40 per share. The 
purchasers of these had the right of choosing twenty-four directors, and 
the annuitants, as a separate body, elected seven. The liability on the 
shares guaranteed the annuity^. Without waiting to make calls on the 
shareholders, yet another scheme was launched in May of the same year, 
the object of which was to provide ^100,000 to lay up a stock of beech- 
mast. This sum was to be borrowed, and the lenders were promised a 
security of ten times the value of their loan, which they could retain in 
their own hands, and interest at 45 per cent.^ 

If all these various financial schemes had succeeded, Hill would 
have raised, besides the 25,000 guineas payable to himself, no less than 
£2>\Bfi00 for the service of the company. He soon found that he was 
unable to convince investors of the solidity of the promised security. 
The loan was a failure ; and, so far from making calls on the shares, it 
was found difficult to collect the sum of £B. 5s, which was payable on 
allotment, much of which was due by the directors themselves. No 
profit had been made in the season 1714-15, and in the autumn of 1715 
the company " was at extravagant weekly charges in the parks and 
forests, where their supervisors had employed vast numbers of workmen 
in gathering mast (made doubly tedious and expensive by the wetness 
of the season),"" and it was found impossible to pay the annuitants from 
the funds in hand, while the shareholders wideavoured to evade the 
liability they had undertaken ^ 

Hill had now another expedient to propound. On September 12th, 
1715, he, together with twenty-one others interested, applied for a 
charter incorporating the Governor and Company/ for making and vending 

^ An Impartial State of the Case between the Patentee, Annuitant* and Sharers in 
the Beech-Oil Company, by Aaron Hill^ London, 1714_, p. 4. 

2 I.e. 5^000 shares paying SOs. each = £7,500, 50 per cent, on £15,000 = £7,500. 
Proposals for a Beech Oil Company, by A. Hill, quoted by Walford, Insurance Cyclo- 
pcedia, i. p. 110. 

2 Proposals for raising a stock of £100,000 for laying up great quantities of Beech- 
Mast for two years, by A. Hill, 1714 [Brit. Mus. T1856 (1)]. 

* An Impartial State ofths Case between th« Patentee, Annuitants and Shearers, p. 6, 

Div. vm. § 8] The Beech Oil Company 1715-20 117 

Beech Oil\ He then proposed to the annuitants that they should com- 
mute their claims on the following conditions. Their principal should 
be " made good to them "" by the company repaying to the allottees 
of 1,000 shares the sum of 1 guinea a share — the remaining calls being 
in arrear. Such shares thus became the possession of the company, and 
they were to be re-issued to the annuitants. Then the latter had 
received a sum of 25 per cent, at Ladyday 1715, and a like amount was 
payable with the shares. Finally Hill had lent the company <^20,000, 
repayable at the expiration of the patent, of which there was ^10,875 
outstanding at the end of 1715, and he offered to hand over this 
reversion to the annuitants. In this way it was calculated that the 
principal would be repaid them, leaving them 1,000 shares as a com- 
pensation for the use of their capital by the company. The whole body, 
with the exception of some five or six, assented to the scheme, but the 
arrangement could not be completed, owing, according to Hill's state- 
ment, to the neglect of the directors to assent to the assigning of the 
reversion of his loan^ HilPs next scheme was that the annuitants 
should exchange their interest, under the arrangement of 1714, for 
shares in the company when it was incorporated, receiving, in addition 
to the 1,000 shares, already promised them, 3,000 more, making the 
whole capital ^40,000 in 8,000 shares ^ However the charter was not 
granted, and the affairs of the company were distracted by quarrels 
amongst the directors and by actions at law on the part of some of the 

Matters remained in this state until 1720 when an effort was made 
to revive the company. During this period of excitement, there were 
several other schemes for the extraction of oils from vegetables. In one 
case — that known as the sunflower patent — the money subscribed was 
returned on or after June 29th^, while it was characteristic of the times 
that the partners concerned " in the oil-patent with land security " were 
invited to register their shares on August 2nd, and a week later they 
were informed that they might inspect the deed of co-partnership and 
the estimate of profits at Mr Long's shop^ In a calculation of this 
kind it is interesting to note that much more is said about the dates of 
payment of the calls of 21 guineas each on 1,600 "parts" or shares than 
of the manner in which profit was to be earned ^ 

'^ State Papers, Domestic, Petition Entry Book, xii. pp. 461, 462. 

2 An Impartial State of the Case between the Patentee, Annuitants and Sharers, p. 8. 

3 lUd., p. 13. * Daily Courant, June 29, 1720. 
^ Ibid., July 2, 1720 ; Daily Post, July 7, 1720. 

^ Estimate of the Profits from the Meliorating of Oils under a Patent of 7 th May 1720 
(Advocates' Library) ; Anderson, Annals of Commerce, iii. p. 345, mentions three 
other oil companies — one working on rape, another on poppies and the third on 


The Tapestry-makers of England (1619 to 1703). 

The Patentees for LACQUERiNa after the manner of 

Japan (1693). 
The Company for making Imitation Russia Leather 

The Company for making ''German Balls" to preserve 

Leather from Damp (1693). 
The Society for improving Native Manufactures so as 

TO keep out the Wet (1691). 

About 1619 the making of tapestry was introduced into England by 
Sir Francis Crane, and James I. signed a grant for the erection of build- 
ings at Mortlake in Surrey \ In 1625 Charles I. granted Crane d^2,000 
a year for ten years, half of which was for the up-keep of the manufacture 
at Mortlake and the other half in payment for three suits of gold 
tapestries ^ Towards the middle of the reign of Charles II. the making 
of tapestry ceased, and in a patent dated October 15th, 1679, the houses, 
looms and designs at Mortlake were granted to Lord Sunderland and 
Henry Brouncker at an annual rent of 5s., subject to the condition that 
the grant was revokable if tapestry-making was not carried on. The 
work was started as soon as the patentees obtained possession, but the 
manufacture was in want of capital. In 1691 the Earl of Montague, 
who then owned the patent, was prepared to surrender the benefit of it 
to a company which had engaged to raise a considerable joint-stock, and 
some of those interested petitioned on August 21st to be incorporated 
as the Tapestry -makers of England^. On September 8th the attorney- 
general recommended the granting of incorporation and of such franchises 
as would best conduce to the success of the project, since tapestry-making 

1 Anderson, Annals of Commerce, ii. p. 372. 

2 Feeder a, xviii. p. 60 ; cf. Financial Statement J. 

3 State Papers, Domestic, Petition Entry Book, i. p. 177. 


Div. vin. § 9] Tapestry, Lacquer, Leather Cos, 1691-4 119 

would consume considerable quantities of wool and give employment to 
poor peopled 

With the aid of an increased capital the business flourished. Like 
the Blue Paper company 2, the designers of the Tapestry-makers chose 
as their subjects " various Indian figures, history, landskips, &c.," and 
"the curious and pleasant hangings" were on sale at the Out-ropers' 
Office, in the Royal Exchanged In April 1693 the company advertized 
that it would have 1,000 pieces for sale in the following month", and in 
August specimens of the work were on view at the signs of the White 
Horse and Black Boy in Newgate Streets In the following year the 
company's office was removed to a more convenient warehouse " by the 
Pump in Bishopgate Street^." Houghton describes the tapestry made in 
1694, as a " pretty adornment for gentlemen's second and third rooms 
and for ordinary folks' first rooms^" Some years later, when tapestry- 
making was established at London, the company no longer found it 
profitable to continue working at Mortlake, and accordingly the King 
was asked to allow the members to cease the trade there ^. 

As showing the prevalence of the taste for the imitation of Oriental 
designs in ornament, an effort was made to establish an English 
lacquering industry. On March 29th, 1693, a patent was granted to 
Thomas Marty n, who was interested in the saltpetre company^, for this 
process, and soon afterwards a company was formed ^^ which was known as 
the Patentees Jhr lacquering after the manner of Japan. Houghton con- 
sidered that the work surpassed that of the East, and, although his 
judgment may err somewhat on the side of enthusiasm for a new 
industry, still old English lacquer-work is of very high quality ^^ In 
1696, the company advertized that it had made and ready for sale 
"a considerable and most curious parcel of goods, viz. cabinets, 
secretores, tables, stands, looking-glasses, tea-tables and chimney-pieces," 
which were to be disposed of by a lottery the tickets for which were 
10*. each^l 

On October 30th, 1691, a warrant for a patent was signed in favour 
of John Tyzack and a number of others, who had found out a new and 
secret invention " of tanning all sorts of skins for leather and also for 

1 State Papers, Domestic, Petition Entry Book, i. p. 186. 

2 Vide supra, p. 72. 3 Houghton, Collections, No. 50, July 14, 1693. 

* London Gazette, No. 2862. & Ibid., No. 2899. « Ibid., No. 2991. 

7 Collections, No. 103. 

8 State Papers, Domestic, Petition Entry Book, v. pp. 100-2. 
^ Vide supra, ii. p. 473. 

10 State Papers, Domestic, H. O. Warrant Book, vi. p. 533. 
" Collections, No. 108. 

12 Ibid., No. 181, Jan. 17, 1696. As to the craze for lotteries at this period, 
cf. A History of English Lotteries, by John Ashton, 1893, pp. 32-79. 

120 " German Balls " a7id Waterproof Cos, [div. viii. § 9 

converting some sorts of the said leather into imitation Russia leather, 
with the same grain, tincture and smell^"; and in the following year 
the same privileges were granted for Ireland ^ In 1694, Houghton 
expressed himself in rather guarded terms as to the future of this 
process, writing that " it would be a great improvement, if brought to 
be like Turkey or Russia leather^"" 

Another industry connected with the leather-trade was the making 
of what were known as " German Balls "" — a composition of wax and 
other ingredients to preserve leather from damp. On April 4th, 1693, 
George Sylvanus applied for a patent for this invention % and by July the 
commodity was placed on the market and a warehouse established at the 
lower end of the Old Bailey, near Ludgate. Each ball was sealed with 
a trade mark of a falcon and spear '^. Like others of its contemporaries, 
this company suffered from imitations, and in November of the same 
year it advertized offering a reward for the detection of counterfeit 
German Balls ^. 

As early as 1691, an attempt had been made to make cloth water- 
proof. On August 14th of that year, William Sutton and George Hagar 
presented a petition in which they stated that they had invented a 
" new and extraordinary art of ordering all sorts of stuffs, silks, hats and 
leather, so as to make them hold out water and also preventing them 
from damage by moths and mildew^,"" and a warrant for a patent was 
signed on August 29th ^ The King and Queen were satisfied with the 
invention and gave orders to the company in 1694, while in the same 
year a warehouse was opened at the Savoy in the Strands 

1 State Papers, Domestic, Petition Entry Book, i. pp. 207, 217. 

2 Ibid., Signet Office, xii. p. 503. 3 Collections, No. 103. 
* State Papers, Domestic, Petition Entry Book, ii. p. 313. 

^ Collections, No. 51, July 21, 1693. e Ibid., No. 67. 

^ State Papers, Domestic, Petition Entry Book, i, p. 174. 

8 Ibid., H. O. Warrant Book, vi. p. 169. 

» London Gazette, Nos. 2965, 2967. 





During the earlier years of the reign of James VI. Scotland had 
suffered from internal dissensions, with the result that both domestic 
and foreign trade was subject to frequent interruptions. No doubt there 
were many wealthy merchants residing in Edinburgh and the ports of 
the east coast, who had acquired fortunes by the importation of 
commodities from France and Hollands Almost all articles of luxury, 
as well as most of the comforts of life, were produced abroad, so that 
the chief imports consisted of wines and manufactures. Those exported 
were raw materials, such as coal, lead, wool, and linen yarn ; the 
management of the shipping of these latter being in the hands of the 
organization known as the Scottish Stapled By the time of James VI. 
it began to be felt that Scotland was very far behind other nations 
in its trade. To the economic ideas of the time it appeared a serious 
evil that raw materials were exported and manufactured goods im- 
ported. Still worse was it that, as was alleged, the Dutch found a 
gold-mine in their fishing off the coasts of Scotland. During the reigns 
of James and Charles I. two broad lines of commercial policy were 
pursued, but in a somewhat hesitating manner, — the encouragement 
of the home and Greenland fishings and the attempt to establish 
Scottish manufactures. In a memorial prepared for the King about 
1620, by John Keymor, it was estimated that the foundation of a trade 
to foreign countries in the exporting offish and manufactures would make 
the country richer by ^^8,000,000. He recommends, with much detail, 
the vigorous prosecution of the fishings both at home and in Green - 
land^ Ideas of this nature had already resulted in the formation of a 

1 "Edinburgh Merchants in the Olden Time/' in Edinburgh Papers, by Robert 
Chambers, 1861, pp. 9-16. 

2 The Scottish Staple at Vere, by the late John Davidson and Alexander Gray, 
London, 1909, pp. 86-112. 

3 Policies of State Practised in Divers Kingdoms for the Encrease of Trade 
(Edinburgh University Library, Laing MSS., Division ii.. No. 52), ff. 3, 22-4. 

124 Scottish industrial Schemes 1590-1634 [div. ix. § 1 

company to prosecute whale fishing and to trade to India in 1617^ ; but, 
owing to engagements made by James I. to the East India Company of 
England, it was necessary to recall the patent. An important fishing 
company was formed by Charles I., which was intended to have sub- 
ordinate associations for each district^. The King reserved the right 
of allotting certain counties to persons chosen by himself, with the 
result that enterprizes requiring business skill were left in the hands 
of prominent courtiers, and it is scarcely necessary to add that the 
shareholders suffered. The same policy of grants of monopolies on 
personal grounds was extended to the field of manufactures. For 
instance, in 1619 privileges were granted to Nathaniel Uddart (son 
of a Nicol Uddart who had entertained the King) for a soap manu- 
factory at Leith, and in 1634 a monopoly for the same commodity was 
conferred on " the King's daily servitor,'' Patrick Mauld^, and in 1610 
a patent had been granted to Sir John Hay for the manufacture of 
glass at Weems^ A still earlier monopoly had been received in 1590 
by several Germans for the production of paper, but none of these 
industries were successful^. A much more serious attempt was made 
to establish the making of a finer cloth than that which had hitherto 
been produced. In fact the watchword of Scottish economic policy 
was to "rival the Dutch in fishing and the English in the woollen 
trade." With these ends in view seven Flemish weavers were induced 
to settle in Scotland in 1601, six of whom were intended to introduce 
continental methods of making serges and one those of broadcloth. 
The foreigners had expected to be allowed to live together but 
the jealousy of the chief towns prevented this, and it was proposed 
that one of them should be sent to each of the seven important burghs. 
The weavers were forced to appeal to the Privy Council ; for, while the 
towns were fighting for the honour of their presence, the men themselves 
were in danger of starvation, being neither "entertained" nor set to 
work. The Council ordered that they should remain for the present in 
Edinburgh, and that in the meantime food and drink were to be given 
them, till they were set to work. Six weeks elapsed without any 
arrangements being made by the burghs for the employment of the 
weavers, and the Privy Council notified the magistrates concerned, that 
unless work was started by the month of November, the royal privilege 
would be withdrawn. Finally, in 1609, the foreigners were allowed to 

^ Vide supra, ii. pp. 361-71. There is mention also of a Scottish Guinea com- 
pany which existed in 1637, cf. ii. p. 16. 

2 Acts of the Parliaments of Scotland, v. p. 222. Vide supra, ii. pp. 362-5. 

3 The Domestic Annals of Scotland, by Robert Chambers, i. p. 610. 

4 Ibid., I. p. 428. 
6 lUd., I. p. 195. 

DTV. IX. § 1] The Cloth Trade 1609-45 125 

remain near Edinburgh, at Bonnington, and cloth was actually produced^ 
The weavers received special privileges from the Privy Council, but 
the work was interrupted by the magistrates of the Canongate, who 
endeavoured to force the strangers to become freemen, and thus, owing 
to the jealousy of the incorporated trades, the work was subject to 
frequent interruptions ^ 

In spite of the many difficulties of the government during the first 
half of the seventeenth century, the ideal of a woollen trade that would 
rival England's was steadily kept in view. Thus in 1623 an attempt 
was made to encourage the woollen and fishing industries by the 
formation of local companies. Beyond a communication from the 
Convention of Royal Burghs thanking the King for his interest in the 
matter, there is no information as to the effects of this proposal on the 
cloth traded Again in 1633 the magistrates of Peebles, anticipating 
the policy of the trustees of the linen manufacture nearly a century later, 
resolved to have spinning regularly taught to the children of burgesses 
by a qualified mistress*. 

In 1641 an act was passed by the Scottish Parliament to encourage 
the production of fine cloth. The native wool was not of a sufficiently 
good quality for the making of broadcloth, and therefore Spanish and 
foreign fine wool, as well as other materials, such as dyes and oil, were 
to be imported free of custom. All cloth produced was also to be 
free of taxation ; and, to encourage the introduction of skilled work- 
men, their employers were to have complete control over them — in the 
words of the statute — "it shall not be lawful for anyone to engage, 
reset, or entertain any of the servants of these works without the 
consent of their masters^."" In 1645 it was further enacted that the 
masters and workers of manufactories should be exempt from military 
service and from having troops quartered on them^. On the faith of 
these acts, factories were started at Bonnington (where the Flemings had 
settled at the beginning of the century), also at Ayr, and Newmills, 
near Haddington''. All three works were favourably situated, for at that 
time the great wool-producing districts were the border shires, and the 

^ Chambers, Domestic Annals of Scotland, i. p. 351. 

2 History of Civilization in Scotland, by John Macintosh, in. p. 306. 

3 Records of the Convention of Royal Burghs, 1615-76, p. 144. 
* Burgh Records of Peebles, p. 272. 

5 Acts of the Parliaments of Scotland, v. p. 497. ^ Ibid., vi. p. 174. 

7 A Representation of the Advantages that would arise to this Kingdom by the 
erecting and improving of Manufactories, but more especially that of woollen cloth, 
with an answer to the objections against this last, and an account of its present state 
and success of the Manufactory at Newmills for woollen cloath, serges, silk, and worsted 
stockings, and of the rules and methods observed by the undertakers in managing it, 
with Proposals to such as shall be willing to join in that work. Edin. 1683, p. 16. 

126 Ayr, Bonnington, Newmills Cos. 1645-70 [div. ix. § 1 

Bonnington and Newmills tnanu factories had the advantage of easy 
access to ports where the finer foreign wools might be imported. There 
is little information as to the success of the undertaking at Ayr. In 
1670 it is recorded that cloth, made by "the manufactorie at Air"" in 
1668 and 1669, was distributed by lot^ to the shareholders =. This 
undertaking may have been that founded before 1650, but it was prob- 
ably a new partnership, established after the Restoration. It may be 
inferred that the one at Bonnington met with sufficient encouragement 
to establish the industry there, as is shown by frequent references to a 
cloth factory at that place from 1683 till the end of the century. The 
Newmills factory is reported to have met with considerable success, but 
it had the ill-fortune to suffer during the Civil Wars. It happened 
that there was a large quantity of cloth belonging to these manu- 
facturers at Dundee which was lost when the town was taken by Monk 
in 1651 ^ 

The gi-eat difficulty of these three early undertakings was the 
necessity for importing skilled workmen, the hindrances to the disposing 
of the goods through the obstructions to free internal trade by the 
burghs, the manufacturers not being themselves retailers, and lastly the 
want of sufficient capital. The poverty of the country was a very 
serious impediment to any progress in manufactures, and, after the 
Restoration, attempts were made to remedy this disadvantage. The 
expenses of starting an industry, requiring machinery and skilled work- 
men, were considerable. Not only had the latter to be tempted from their 
homes by large payments, but there were many obstacles placed in the way 
of those who wished to obtain manufacturing appliances in England or 
abroad ; and in addition the cost was magnified by the necessity of such 
payments being made in a depreciated currency, and at an adverse rate 
of foreign exchanged After the Restoration a resolute attempt was 
made to obviate these hindrances to the establishment of industries by 
two acts passed in 1661, which embodied ingenious devices for the 
attracting of foreign capital by re-enacting the privileges granted by the 
act of 1641, and in addition offering naturalization to foreigners. The 
period of exemption from public and local taxes was limited to nineteen 
years; and in the special case of linen and woollen works the under- 
takers were authorized to have a seal for stamping linens or cloth of a 

1 For the system of division of cloth by lot^ vide infra, p. 141. 

2 Letter and account, signed James Marr_, ^^ clerk of the manufactorie at Air" in 
The Scottish Antiquary, i. pp. 22, 23. 

3 Representation of the Advantages,,. of Erecting Manufactories, ut supra, p. 16. 

* The Records of a Scottish Cloth Manufactory at New Mills, Haddingtonshire, 1681- 
1703, edited from the original manuscripts by W. R. Scott, Edinburgh (Scottish 
History Society, 1905), pp. xxiv-xxx. 


Div. IX. § 1] Scottish Acts of 1661 and 1681 127 

certain standard. To prevent the recurrence of friction between the 
foreigners and natives, and also as a further encouragement towards 
the introduction of capital, it was enacted that, inasmuch as manu- 
factures previously established had for want of sufficient stocks, counsel 
and assistance been crushed by those in more wealthy countries, in any 
case where such enterprizes were beyond the means of individuals joint- 
stock companies might be formed, with full powers to incorporate 
themselves ; and the making of cloth, linen and stockings is indicated 
as a suitable field for such associations. It was further provided that 
no one except members of such companies should be allowed to export 
the goods made by that company. Rules were also framed for the 
internal organization of the companies. The minimum subscription 
was five hundred merks Scots, and the qualification for a directorship 
was one thousand merks Scots ^ . 

This legislation failed to effect the object for which it was designed, 
because, though considerable privileges were granted to the proposed 
industries, it was thought that they would not be in a position to 
compete on favourable terms with manufactured goods, imported from 
abroad where such trades had long been established. In fact most of 
the " infant industries,"''' started immediately after the Restoration, were 
afforded protection by means of patents or acts of the Privy Council 
prohibiting importation of the commodities they were intended to 
produce. A period of twenty years elapsed before measures were taken 
for a complete protection of the home products. This movement re- 
ceived its final shape during the visit of the Duke of York to Scotland 
in 1681. On March 1st and again on April 11th of that year the 
Privy Council prohibited the importation and wearing of certain foreign 
manufactured goods. These acts were followed by a proclamation to 
the same effect^. This policy was ratified by an act of Parliament, passed 
on September 13th, entitled an "act for encouraging trade and manu- 
factures." The heading of this statute has caused the general trend of 
its provisions to be misinterpreted, for it is not only designed to en- 
courage native industry but also to be a sumptuary law. These two 
lines of thought are clearly expressed in the preamble, which states that 
" the money of this kingdom has been exhausted and the foreign exchange 
raised by the importation of foreign commodities which are superfluom 
or may he made within the kingdom hy encouragement given to the 
maniifactures thereof. '^ With reference to " superfluities," the importa- 
tion of a number of articles of luxury, such as gold and silver thread 
(as well as things made of such thread), flowered ribbons, silk-embroidered 

1 Acts of the Parliaments of Scotland, vii, pp. 255, 261. 

2 Acts of the Privy Council (General Register House, Edinburgh); Acts of the 
Parliaments of Scotland, viii. p. 348. 

128 Companies under the Actof\^%\ [div. ix. § 1 

cloths, were forbidden to be imported or worn. To encourage home 
manufactures similar prohibitions were enacted against the importation 
of a large number of commodities, such as linen, cambric, calico. East 
India linen and all stuffs made of linen or cotton wool, excepting arras 
carpets ^ Persons possessed of either capital or technical knowledge 
were encouraged to settle in Scotland and found new industries or im- 
prove existing ones, not only by the prohibition of foreign manu- 
factures but also by the grant of additional privileges. They were 
to receive naturalization on condition of setting up manufactures of 
cloth, linen, stockings, or soap, and teaching the trade to Scotsmen. 
All the raw materials imported for a manufacture, which received the 
benefit of this act, were to be admitted free of custom and all public 
dues for ever. Manufactured products exported were exempt from 
duties for nineteen years after a given industry was founded. The 
capital invested was declared not subject to public or local taxes. The 
works, recognized as a manufactory, were not liable for the quartering 
of soldiers, and servants employed escaped military service for seven 
years. Finally the act ratifies 1 Car. II., Nos. 43 and 46, in pro- 
hibiting the export of raw materials produced at home, such as lint 
or yarn^ 

Although the acts of 1661 and 1681 had given partnerships the 
right to incorporate themselves, to obtain the privileges offered it was 
necessary for persons, who had started or who intended to start a new 
industry, to apply to Parliament or the Privy Council. Between 1661 
and 1681 applications were made by a company for making wool-cards 
at Leith, founded in 1663^, a glass manufactory also at Leith (1664)*, 
and the Royal Fishery company (1670)^ These three enterprizes were 
granted monopolies. Then there were two sugar works at Glasgow 
(1667, 1669)S which, though they had no monopoly, were protected 
against foreign competition ; and in 1667 a company for whale- 
fishing and soap-making was formed, which was encouraged by a 
special act imposing duties on foreign soap, which almost amount to 

On the passing of the act of 1681, which granted protection to 
any company or individual that could establish its claim before Parlia- 
ment, and more especially after the Revolution, the privileges of this 
act were sought and obtained for very many different industries. 
Grants to cloth works and glass works were comparatively frequent. 
An important linen company, known as "the Scots Linen Manu- 

1 Acts of the Parliaments of Scotland, viii. p. 348. 

2 Ihid., VIII. p. 349. ^ Vide infra, Section 5. 

* Ibid., Section 8. ^ Vide supra, ii. pp. 376, 377. 

6 Vide infra J Section 3. ^ lUd.j Section 2. 

Div. IX. § 1] Companies under the Act of 1681 129 

facture" was incorporated in 1693^ a silk manufactory in 1697% and 
manufactures of baizes, stockings, sail-cloth, ropes, cordage from 1690 
to 1700 ^ Two new partnerships for sugar refining were formed at 
Glasgow in 1696 and 1700^ A company for making white paper was 
established in 1694^ In the department of iron, steel-work and mining 
there was a number of ventures. A " Company for working mines and 
minerals in Scotland '' was formed in 1691? ; another for a draining 
engine in 1693 ; a foundry had been established in Edinburgh in 1686. 
There were two hardware companies (for making knives, scythes, etc.) at 
Glasgow in 1699, 1700, and a co-partnery for smelting minerals (1701)^ 
Of a more miscellaneous character were two gunpowder works (1690 and 
1695), a leather stamping company (1695), a company at Leith for 
works in horn and ivory (1695), another to carry on saw-mills at Leith 
(1695), and a pottery company (1706)^ 

1 Vide infra, Section 4c. '-* Ibid., Section 4d. 

3 Ibid., Section 4 e. * Ibid., Section 3. 

^ Ibid., Section 6. ^ Ibid., Section 7- 
^ Ibid., Section 8 

S. C. III. 

SOAPERIE (1667-1785). 

The manufacture of soap from an early period had been a favourite 
industry for the estabhshment of monopolies. In the time of James I. 
and Charles I. the production of this commodity was involved in a 
net-work of exclusive grants. The searches, fines, and imprisonments 
carried out at the instigation of the Society of Soapers of Westminster 
created no little indignation in England \ Scotland did not escape the 
effects of the same policy. In 1619 a patent was granted to Nathaniel 
Uddart for the manufacture of soap. Having erected " a goodly work " 
at Leith, he petitioned the Privy Council on June 21st, 1621, that all 
foreign soap should be prohibited. In reply the Privy Council ordained 
that the importation of soap should be forbidden, provided that Uddart 
should sell that made by him at a price not exceeding 24^. per barrel 
for green soap and S^s. per barrel of white soap, the barrel to contain 
16 stones. By July 1623, several complaints had been made to the 
Council, and it was decreed that the privileges granted in 1621 should 
terminate in a year from the date of the order 2. Probably this patent, 
if not recalled, was allowed to lapse, for in 1634 a new grant was made 
to the " King's daily servitor," Patrick Mauld of Panmure. Inasmuch 
as Mauld was prepared to provide all the requisites for soap-boiling, 
and since the trade was of such a nature that the public would suffer if 
" it were left indifferently to all," the monopoly of making all kinds of 
soap was granted to Mauld and his representatives for thirty-one years. 
In addition, the patent licensed the grantee to fish in the Greenland 
and home seas to obtain the oil then required for the production of 
soap. He had also the sole right of making potash by utilizing such 
wood as was most fit for the purpose, likewise all sorts of ferns and 
vegetable things whatsoever. As in other grants by the Stuarts, Mauld 

1 A Short and True Relation Concerning the Soap Business, London, 1641 ; vide 
supra, Part i.. Chapter xi. 

2 Chambers, Domestic Annals of Scotland, i. p. 510. Leith and its Antiquities, 
by James Campbell Irons, 11. pp. 141, 142. 

Div. IX. § 2] The Glasgow Soaperie 1667-95 131 

was to make a payment in return for the monopoly, which was fixed at 
£9.0 sterling a year\ This patent would have continued till 1665, but 
in 1661 a monopoly for twelve years was granted for the manufacture of 
" castle soap 2."" 

After the Restoration the attention of the legislature was directed 
towards soap, and in 1661 a tax of £Q Scots was imposed on each 
barrel imported; at the same time, all materials required by the home 
producer (such as oil, potash) were admitted free of duty, while soap 
made within the country was exempted from taxes for nineteen years ^ 
As in the case of sugar, when soap was exported two ounces of bullion 
were to be brought to the Mint for every six barrels shipped "*. By a 
subsequent act of 1669 the same condition was applied to importation^. 

Under the encouragement of these acts, which amounted almost to 
the exclusion of foreign soap, an influential company was formed in 
1667, with its headquarters at Glasgow, for whale-fishing and soap- 
boiling. There were originally nine partners, who subscribed d^l,300 
sterling each, making the capital of the undertaking =£^1 1,700 sterling. 
At first the chief efforts of the company were directed towards whale 
fishing and foreign trade to Greenland and the extreme north of 
America and Russia. A large ship (for that time) of 700 tons burden, 
and carrying forty guns, was built at Belfast and named the Lyon. 
Soon afterwards three or four other ships were despatched. The 
company was successful in catching whales, and the blubber was boiled 
down at Greenock in extensive premises known as the " Royal Close." 
This was only the first stage in the process of soap-making, for the 
main works, known as "the Soaperie," were situated in Glasgow at 
the head of the Candleriggs. These premises were built on the site now 
occupied by Nos. 108-120 Candleriggs and Nos. 12-16 Canon Street, 
and consisted of a large square surrounded by houses for the managers, 
stores, sheds, and cellars ^ 

This company, like so many of its predecessors, soon found that 
whale-fishing was a disappointing speculation'', and the voyages became 
gradually less frequent. After some of the ships had been lost, this 
part of the operations of the company was abandoned, and in 1695 the 
Committee of Trade was prepared to grant privileges for seven or ten 
voyages to any who would adventure «. The Glasgow company, though 

^ Chambers, Domestic Annals of Scotland, ii. pp. 80, 81. 

2 Acts of the Parliaments of Scotland, vii. p. 47- 

3 Ihid., VII. pp. 88, 89, 203. 

* Ibid., VII. p. 253. ^ Ibid., vii. p. 560. 

6 Glasghu Fades: A View of the City of Glasgow, edited by J. F. S. Gordon, 

Glasgow, pp. 873, 874. ^ Cf. supra, ii. pp. 69-75. 

8 State Papers, Scotland (at the Register House, Edinburgh), Parliamentary 
Papers circa 1695 — List of Acts to be desired. 


132 The Glasgow Soaperie 1695-1785 [mv. ix. § 2 

it had obtained in 1685 an act granting it the privileges of a manu- 
facture, and also a recommendation to the tacksmen of the Customs 
that there should be no abatement of the duties on whalebone and 
soap^, does not appear to have responded to this invitation. The 
renewal of this part of the enterprize fell to others. Sir John Shaw, of 
Greenock, obtained an act granting the privileges of a manufacture to a 
company he had formed "with a considerable stock," to carry on the 
fishing industry 2, and one of the many enterprizes undertaken by Robert 
Douglas, of Leith, was whale-fishing, in which he was " at vast expenses 
and great loss^" According to M'Ure all the capital invested by the 
Glasgow Greenland fishing and soap company in the former industry 
was lost"*. 

The Soaperie, freed from the incubus of unfortunate whaling 
voyages, was successful. Whether it remained in the hands of the 
original company or was sold to a new one does not appear^. In 1700 
the manufacture of soap was mentioned as one of the Scottish industries 
which was firmly established^ In 1715 the manager advertized in the 
Glasgow Courant that he was prepared to sell good black or speckled 
soaps at the Soaperie at reasonable rates. The company appears to 
have been conducted in a quiet, unenterprizing manner till the beginning 
of the last quarter of the eighteenth century. " Senex," who visited the 
works not long before the concern was wound up, wrote that "there 
appeared to be only about half a dozen men employed, and these were 
clamping about the floor in a very inactive manner, having heavy iron 
shoes on their feet. It was easy to see that they were working at days' 
wages''." In 1777 the buildings were partly consumed by a fire^, and 
1785 the whole ground buildings and utensils were advertised to be sol^ 
by public roup». 

^ Acts of the Parliaments of Scotland , viii. p. 490. 

2 Ibid., X. p. 80. 

3 Parliamentary Papers, 1703 — The Petition of Robert Douglas, elder ai 
younger. Soap Boilers in Leith. 

* In Glasghu Fades, p. 872. 

^ From M^Ure's language it may be inferred that, on the failure of the whalii 
venture, the soap manufactory was sold — '^'^all their projects were frustrated," h| 
writes, "and that considerable stock entirely lost and nothing remained save the 
buildings wherein soap is boiled and now pertains to other people." 

^ MS. Discourses anent the improvements may be made in Scotland (Advocates' 
Library, Wodrow MSS., 33. 5. 16), f. 15. 

' Glasghu Fades, p. 874. 

8 Annals of Glasgow, by James Cleland, Glasgow, 1816, ii. p. 367. 

» Glasgow Mercury, August 15, 1785, in Glasghu Fades, p. 874. 


The Wester Sugar Work (1667). 
The Easter Sugar Work (1669). 
The South Sugar Work (1696). 
The King Street Sugar Work (1700). 

The refining of sugar had been started at Glasgow during the 
Protectorate of Cromwell, or not long after the Restoration. At first 
the profits were very large, and, according to Gibson, it was in this 
industry that the first fortunes in business were acquired in the West of 
Scotland ^ It was not long before the Government availed itself of the 
opportunity of raising revenue from the production of a new taxable 
commodity, for in 1661 an act was passed requiring that 2 ozs. of bullion 
should be brought to the mint for every 60 lbs. of sugar exported I In 
1669 this act was modified to the extent of imposing a duty of 6 ozs. of 
bullion to be brought to the mint for every cwt. of loaf sugar exported^. 
The design of this legislation was to secure that at least part of the 
proceeds of sales made abroad should be brought back in bullion, and 
that some of this would be handed over to the State to be used as 

After the passing of the acts of 1661 a partnership was formed in 
the year 1667, consisting originally of four persons. "At first the 
proprietors got a little apartment for boiling sugar — a Dutchman 
being master-boiler — this undertaking proved very effectual and their 
endeavours wonderfully successful, so that they left their little apartment 
and built a great stone tenement with convenient office-houses for their 
work, within a great court, with a pleasant garden belonging thereto''."*' 
This building, known as the Wester Sugar House, stood at the corner 
of Candleriggs and Bell's Wynd^. 

1 The History of Glasgow , by James Gibson, Glasgow, 1777, p- 246. 

2 Acts of the Parliaments of Scotland j vii. p. 254. 

3 Ibid., VII. p. 560. 

* Glasghu Fades, p. 871. 

^ Old Glasgow, by Andrew MacGeorge, Glasgow, 1880, p. 155. 

134 Wester and Easter Sugaries 1669-81 [div. ix. § 3 

About two years afterwards (i.e. in 1669) another partnership for 
sugar-refining was established by five partners. This was also successful, 
and, according to M'Ure, the joint-stock employed "wonderfully 
increased ^^ In 1684 the capital of one of these undertakings amounted 
to d£^l 0,000 sterling^. The buildings, afterwards erected for the refinery 
founded in 1669, were known as the Easter Sugar Work. An illustra- 
tion of the building, which was remarkable for its great height 
(considering the date when it was built), is given in Glasghu Facies^. 
On the passing of the act of 1681 for the encouragement of trade and 
manufactures, the partners of both these works presented a joint 
petition to Parliament asking that the privileges offered by the act 
should be extended to their undertakings. They stated in support of 
their request that they were in a position to sell sugar at one-third of 
the price at which it had been imported, and on this and other grounds 
both Sugar Houses obtained the privilege of a manufacture for nineteen 
years from 1681 ^ 

Soon afterwards an event happened which threatened the success of 
the Wester undertaking, and which at the same time shows a peculiar 
risk to which these very small companies or partnerships were subject. 
Peter Gemmill, one of the four original partners, had died, leaving his 
share in the concern to his wife. She was unable to take part in the 
management "as partners should and do, because it requires great skill and 
pains." She also refused, according to the complaint presented to the 
Privy Council by the other partners, to contribute her share, or to 
reckon according to the contract signed by all the partners. As a 
result the works were absolutely at a stand, the stock of materials was 
wasting, and the servants idle — the latter meaning a loss of £\Q sterling 
per month. The other partners prayed the Privy Council to settle the 
value of the widow''s share, and they would buy her out. In the end, 
however, the magistrates of Glasgow were directed " to compose the 
dispute," and there is no further information as to whether the share in 
question was transferred, or whether the female partner became recon- 
ciled to the "great pains" of business^ If any conclusion can be drawn 
from the state of the business when M'Ure wrote his View of Glasgow ^ 
it would appear that though many of these West of Scotland partner- 
ships at any given time were confined to a few persons, the interest was 
not long retained in one family, for in this particular case, in M^Ure's 

^ A View of Glasgow J ut supra, p. 282. 

2 Collection of Petitions to the Barons of the Exchequer (Edinburgh University 
Library) — Petition of the Masters of the Sugarie Works at Glasgow. 

3 p. 643. 

* Acts of the Parliaments of Scotland, viii. p. 360. 
6 Acts of the Privy Council of Scotland, 1862-5, ff. 187, 188. 

Div. IX. § 3] The Production of Rum 1681-95 135 

time, there were six partners, and none of the six had the same name as 
any of the original four\ 

Probably one reason for the continued success of these sugar works 
was that the refining industry was supplemented by the production 
of rum. The rum was sold to great advantage in the colonies, and 
a considerable amount of it was consumed at home. This branch of 
the industry, however, met with some hindrances from various sources. 
Owing to the system of leasing the collection of taxes to private 
individuals, the tacksmen of the Customs did not obey the different 
acts of Parliament designed to encourage home industries. In fact, 
as a contemporary writer expressed it, " they do not regard the laws but 
their own profit, per fas et iiefas'^^ In the sugar industry, for instance, 
though exemption from Customs had been granted by the act in favour 
of the Wester and Easter Works in 1681, a few years later the tacksmen 
at Edinburgh seized a quantity of rum consigned for export by the 
proprietors of these works. The case was debated before the Exchequer 
in April 1684, and the claim to exemption from duties was allowed^. 
The matter did not rest at this stage, for a counter petition was 
presented declaring that the trade in rum ought to be suppressed, as this 
drink was injurious to the health of the lieges^ Though this attack 
on the making of rum failed for the time, it eventually produced a 
temporary result, for in 1695 an act of Parliament was passed pro- 
hibiting both the making and sale of rum, except for export, on the 
grounds that it hindered the sale of strong waters made of malt, and 
also that "being a drug rather than a liqour," the consumption of it 
was prejudicial to healths This act was repealed soon afterwards. As 
against this short-lived repressive legislation is to be counted the 
imposition of a duty« of ^6 Scots per cwt. on imported sugar candy. 
The Royal Burghs too had an intention of supporting the industry, but 
if any steps were taken there is no record of their nature''. 

On the settlement of domestic affairs in Scotland after the Revo- 
lution, when a serious effort was being made to develope home manu- 
factures, it was to be expected that one of the first enterprizes that 
would attract the capitalist would be that which was officially declared 
to have been "a most profitable one^." In 1695 Robert Douglas, of 

^ Glasghu Fades, p. 871. 

2 A Letter to a Member of Parliament, Edinburgh^ 1700^ p. 13. 

3 Collection of Petitions to the Barons of the Exchequer (Edinburgh University 
Library)— Petition of the Masters of the Sugarie Works at Glasgow. 

* i6irf.,— Petition relating to the Sugarie Works, Glasgow. 
^ Acts of the Parliaments of Scotland, ix. p. 462. 

6 Ibid., X. p. 34. 

7 Records of the Convention of the Royal Burghs, 1677-1711, p- 95. 
^ Acts of the Parliaments of Scotland, x. p. 66. 


136 South and King St. Sugaries 1695-9 [biv. ix 

Leith, who was at the same time promoting works for the manufacture 
of soap, earthenware, china, and starch, was granted the " privilege of a 
manufacture" for the usual term of nineteen years, not only for the 
diverse undertakings already mentioned, but also for sugar works from 
which he was entitled to export rum to the amount of 18 tuns yearly \ 
In spite of this attempt to settle the industry at Leith, the seat of the 
trade remained at Glasgow. In 1696 an act was passed in favour of 
Robert and James Montgomery (who had at least one other partner 
associated with them), which stated that, owing to the success of the 
industry, the number of works should be increased. Accordingly the 
same privileges, already granted to the other undertakings, were con- 
ferred upon this one under the title of the New Sugar Manufactory at 
Glasgow"^. Following the custom of the existing partnerships, this 
undertaking adopted a local designation, and its works became known 
as the South Sugar House. It was described by M'Ure as situated on 
the west side of Stockwell Street, and consisting of a large court, 
surrounded by high and low apartments, with cellars, a store house, 
boiling houses with distilling apartments, pleasant gardens, and all con- 
veniences whatsoever^. 

There were now West, East, and South Sugar Houses, and it might 
be expected that the next to be founded would be the North Sugar 
House. As a matter of fact there were works under this title which 
were situated close to the Wester House, and appear ultimately to have 
been absorbed by the older undertaking''. The Northern concern, how- 
ever, was founded later, and the fourth Sugar House, known as that at 
King Street, was granted the privilege of becoming a statutory under- 
taking in 1700 ^ The act is in favour of Matthew and David Campbell, 
but soon afterwards the partners were six in number. In fact, during 
the first half of the eighteenth century, these and other co-partneries 
consisted of from five to ten of " our high-class citizens, such as our 
Provost, Baillies, and Deans of Guild, with a ' Sir John ' or a ' Sir 
George"* scattered here and there among them^"" It is related that 
there was much consternation in Glasgow when, in 1736, the six 
partners in the Easter Sugar Work, comprising the Provost, two Bailies, 
the Treasurer of the City, and a goldsmith were bought out by a new 
and unknown co-partnery, called " Robert M'Nair, Jean Holmes' and 
Co."' The title of the purchasing "Co." was in reality a somewhat 
ponderous joke. M'Nair was a " new man," who had acquired consider- 

^ Acts of the Parliaments of Scotland, ix. p. 491. ^ Ibid., x. p. QQ. 

3 A View of the City of Glasgow, p. 283. 

* Giasghu Fades, p. 871. 

^ Acts of the Parliaments of Scotland, x. p. 212. 

^ Qlasghu Fades, p. 440. 


Div. IX. § 3] The Sugaries after 1700 137 

able wealth, and finding that all undertakings of magnitude were in the 
hands of co-partnerships, he, as a satire on the prevalent custom, regis- 
tered his firm in his own name and that of his wife, thereby forming 
literally " a one man *" company \ 

The Glasgow Sugar Houses constitute an exception to the general 
rule that few industrial companies founded in the seventeenth century 
survived the removal of protection after the Union. This fact is the 
more interesting, since the sugar trade had fewer privileges than the 
cloth, linen, or paper companies. It had been founded before the act of 
1681, and there was never a complete prohibition of competitive 
products. Even the exemption from duties had ceased by 1715, for 
in that year the Crown sued the Leith refiners for ^40,000 sterling of 
" bygone '"' duties. Eventually a compromise was effected by which 
the claim by the Crown was remitted on condition that the refiners 
should surrender their rights to exemption from duties under their 
private acts. 

^ Glasghu Fades, pp. 438-40. 


A. The Woollen Manufactory at Newmills in the 
SHIRE OF Haddinoton (1681-1713). 

The acts of the Privy Council and of Parliament in 1681 for the 
encouragement of trade and manufactures were far from being specu- 
lative, for in that year there were several proposals for the development 
of Scottish industries. Prominent amongst these was one which aimed 
at the establishment of a large cloth-manufacturing company. This 
scheme, indeed, was probably one of the reasons of the legislation of 
1681, for the Duke of York (afterwards James II.), who was then 
visiting Scotland, had approved of the idea. Finding that the country 
had few commodities to export to pay for imports of cloth, etc. from 
England, whereby " English money was not to be had under 6 or 
7 per cent, [and was] scarce at any rate,"*' while the exchange between 
Edinburgh and London had risen,as against Edinburgh, to between 12 per 
cent, and 15 per cent., he favoured a plan of establishing works for the 
production of fine clothe He "invited and encouraged'' the under- 
takers, some of whom were Englishmen of substance, so that with the 
prestige of royal patronage there was no difficulty in finding an 
adequate amount of capital. The chief promoters of the company 
were Robert Blackwood, an Edinburgh merchant of repute who was 
afterwards master of the Merchant company, and Sir James Stanfield, 
a man at that time of considerable wealth 2. The part taken by Stanfield 
in the formation of the undertaking in all probability decided the 
locality of the works. He had acquired a property near Haddington, 
then known as Newmills^, which formerly belonged to the local 
monastery^. The situation was evidently a suitable one for the in- 

^ A Representation of the Advantages... of erecting Manufactories, ut supra, p. 3. 

2 Ibid., p. 3; Edinburgh Papers, by Robert Chambers, 1861, p. 23. Robert 
Blackwood was a director of the Darien Company, to which he subscribed £3,000 
stock. He was a member of the '^^ Committee of Improvements" of that Company. 
— Darien Papers, pp. 31-4. 

3 The modern name is Amisfield, vide infra, p. 158. 
* Statistical Account of Scotland, 1702, vi. p. 539. 

Div. IX. § 4 a] Formation of a Cloth Company 1681 139 

dustry, being in a good wool-producing district, and within easy reach 
of Edinburgh. As already shown, it had been the site of a similar 
undertaking thirty years earlier^ Stanfield was prepared to lease to the 
company his walk mills " and all his office-houses, which are many, 
great and spacious '" at what was then considered a moderate rent 2. 

The very interesting document, which might be characterized as the 
prospectus of the company, is in existence^. It was calculated that a 
capital of <£'5,000 sterling or d^60,000 Scots would suffice to purchase 
and maintain 20 looms employing 233 hands, besides providing working 
capital. A detailed estimate of the probable output was made, and it 
was considered that there could be produced annually 55,823 ells of cloth, 
realizing, on an average, ^^55,823 Scots. Thus the yearly turnover 
would have almost equalled the capital. The details for the cost of 
production throw much light on the current rates of wages, and the 
total expenses under this head, together with the provision of raw- 
material, amounted to nearly .£^38,900 Scots. To this was to be added 
the payments necessary for foreign skilled workmen. The rent of the 
works was only payable after legal interest had been earned on the 
capital, so that it does not appear in the working expenses. Thus, in 
the form of a modern prospectus, the estimates might be summarized as 
follows : 

The profit anticipated from the factory — 

Scots Sterling 
Receivable for cloth, 55,823 ells, averaging £1 Scots per ell ... £55,823 £4,652 

Less expenses — Wages £18,144 Scots per ell 

Materials £20,744 Scots per ell 

£38,888 £3,241 

Profit (subject to payments to foreign workmen) £16,935 £1,411 

This (not allowing for deductions) exceeded 25 per cent, on the 

A company such as this, with great privileges from the State, was 
objected to by many. Conservative people complained that it was 
a novelty, and that the cloth could never be so good as that made in 
England. Others were of opinion, even if the cloth were sufficiently 
good, it could never be sold as cheaply as that imported prior to the 
prohibition. While the works were being erected and the workmen 
procured, good cloth could not be obtained, and afterwards, even 
when the producing stage was reached, the company could not manu- 

^ Vide supra, p. 125. 

2 A Representation of the Advantages .. .of erecting Manufactories, ut supra, p. 18. 

3 The Records of a Scottish Cloth Manufactory at New Mills, Haddingtonshire 
1681-1703, edited by W. R. Scott, Edinburgh (Scot. Hist. Soc), 1905, pp. Ixxxiv.- 


140 The Newmills Cloth Company [div. ix. § 

facture enough to supply tKe whole country. Thus the temptation to 
import cloth, in spite of the Proclamation and the act of Parliament, 
would be so great that it would be impossible for the company to gain 
the encouragement expected and intended by Parliament and the Privy 
Councils On behalf of the company it was shown that ultimately it 
would be possible to produce as cheaply in Scotland as in England, 
owing to the fact that " nowhere else do workmen live so cheaply as in 
Scotland 2." Where so large a part of the cost of production consisted 
of wages, this was a most important consideration, which was bound in 
time to affect the market-price. In fact, as the writer expresses it, 
"where cloth can be cheapest made, it can be cheapest sold"; but the 
question was would it he under a system of rigid protection .^^ This 
is partly answered by the admission that it was not intended that the 
Newmills company should supply the whole country, and all information 
was offered to others who might intend to set up manufactories else- 
where^. To attain the desirable end of home-made broadcloth 
eventually selling as cheaply as that made abroad, and to prevent the 
exportation of bullion, it is urged that patriotic Scotsmen should be 
content with a cloth " a little dear at first," owing to the great cost of 
"importing looms and procuring foreign workmen, besides the many 
losses and inconveniences attending beginners," so that the consumer 
was to pay for the mistakes of the producer*. 

The promoters of the scheme were fully convinced of the personal 
and national advantages to be derived from the undertaking, and on 
May 10th, 1681, the document known as "the great contract" was 
signed ^ The members of the company had no little pride in this 
document. " We have entered into a mutual contract," one of them 
writes, " whereby we have bound ourselves to such rules and methods 
that the undertaking cannot fail except in case of a public and universal 
calamity ^" The " methods" mentioned are of great interest, not only 
as an early instance of joint-stock organization for a manufacturing 

^ A Representation of the Advantages, ». of erecting Manufactories, ut supra, pp. 8, 9. 

2 It appears from the minutes of the company that it was necessary to import 
all the skilled labour at higher wages than those ruling in England. Such work- 
men were bound to train Scottish apprentices, so that in time (but only after a 
considerable interval) the company might have obtained the benefit of a cheap 
labour supply. The rates of wages are tabulated in Records of a Scottish Cloth 
Manufactory, ut supra, p. xxiii. 

3 A Representation of the Advantages. ..of erecting Manufactories, ut supra, pp. 10, 22. 

4 Ibid., p. 11. 

^ A copy of this document, which was entitled '' Articles aggreed upon by the 
merchant erectors of the cloath Manufactorie at Newmilnes," is printed in the 
Records of a Scottish Cloth Manufactory, ut supra, p. xc. 

^ A Representation of the Advantages .. .of erecting Manufactories, ut supra, p. 19. 

Div. IX. § 4 a] " The Great Contract " 1681 141 

company, but also as showing in several directions interesting traces of 
the transition from the regulated to the joint-stock type of organization, 
j Four general meetings were to be held in each year. At the meeting 
in May five persons were to be chosen as managers, and (after the first 
election) two of the former managers were to continue in office, and 
three new ones only were to be elected. The chairman at both 
managers' and general meetings was called the praeses, and all orders 
for payments were signed by him. The managers were to meet at least 
once a week. There were certain self-denying ordinances relating to 
the holding of stock. During the first three years no payment what- 
ever was to be made to stockholders by way of dividend, for the second 
three years proprietors were to receive the legal rate of interest on their 
capital and no more. The balance of profit remaining at the end of the 
sixth year (after payment of interest for the second three years) was to 
be added to the original capitals Sir James Stanfield also met the 
company in a generous manner. The rent of the ground and buildings 
was not to constitute a charge against the gross profit, but was to be 
deferred until the legal interest had been earned and paid on the capital, 
and was to be charged against the remaining profit^. There was also a 
remarkable limitation of the rights of bequest to the representatives of a 
member of the company — his stock passed to female heirs without division, 
and if the beneficiary were a minor only one tutor or curator could have a 
voice at the meetings ^ The regulations and obligations of the members, 
as to the disposing of the cloth produced, are important. The cloth was to 
be brought to the warehouse of the company at Edinburgh, which was 
situated " below the Trone Church ^.''' The managers, having ascertained 
the cost of production, added 9^d. per 1,9. per ell, or in other words 
allowed as manufacturer's profit 16 per cent, on the cost of production. 
The cloth so valued was apportioned in convenient quantities and distri- 
buted by lot amongst the proprietors, each of whom had the right to 
draw once for each c^lOO sterling of his stock. If a member who drew 
a quantity of cloth failed to remove it within fourteen days, it was sold 
by public roup. When there was a loss as compared with the prime 
cost, that loss was charged to the defaulter ; if on the other hand the 

* A Representation of the Advantages... of erecting Manufactories , ut supra j 
pp. 19, 20. 

2 Ibid., p. 18. 

3 These and other similar regulations probably arose from the condition that 
cloth was only saleable to shareholders and members of the Merchant Company. 
The intention appears to have been to confine the trade to what were called in 
England legitimate merchants, i.e. those who had served an apprenticeship. At 
the same time it is to be noted that the company admitted persons of distinction as 

^ The Edinburgh Courant, No. 184, August 16-19, 1706. 

142 The Newmills Cloth Manufactory [div. ix. § 


sale showed a profit, the gain was credited to the company \ The 
reasons for pro rata distributions of commodities to shareholders of 
early companies will be more apparent, especially in Scotland, when the 
great restrictions of trade even within the country are remembered. By 
such a device, the cloth manufactured was distributed in many directions 
where the company in its corporate capacity could find no opening^ In 
the case of the Newmills company, there was the further advantage that 
every proprietor as a retailer was vitally interested, altogether apart 
from his being a stockholder, in preventing or at least reporting cases 
in which foreign cloth was imported. It sometimes happened that the 
rule, confining the distribution of cloth to members, was relaxed in 
order to conciliate persons who might be useful to the company. On 
another occasion the cloth drawn for a member, who had failed to pay 
the calls on his stock, was, by resolution of the managers, assigned 
to another shareholder. Bailie Douglas, who had obtained none by lot, 
he having befriended the company by lending money for "supplieing 
their needfull occasions^." It is an interesting comment on the ex- 
pressions of opinion as to the solidarity of the members of the company 
amongst themselves that less than a year after the signature of "the 
great contract" some of the stockholders were dissatisfied with the 
proceedings of the managers, and wished to have the plans of the board 
explained to them. It was pointed out that any member might be 
present at meetings of the managers, and that the books were always 
open to inspection. Besides it was suggested that the stockholders 
should appoint a committee from their own number to report on all 
proceedings of the managers since the formation of the company^. 

As already shown the contract of co-partnership was signed on 
May 10th, 1681, and from the 22nd of June the meetings of the 
managers were recorded in a minute-book, preserved in the University 
Library, Edinburgh. On the title-page there is the inscription, " Book 
for the Managers of the Manufactories Weekly Sederunts," and the 
records of proceedings extend till March 21st, 1691. The records have 
been carefully kept, and reference was facilitated by the ingenious device 

1 A Representation of the Advantages... of erecting Manufactories, ut supra j p. 20. 
This regulation was a modification of that originally intended. According to the 
" Memoriall " {Records of a Scottish Cloth Manufactory, pp. Ixxxiv.-ix.)^ the master 
was to estimate the cost of production^ and the managers were then to add to this 
sum the diflference between it and the price at which they had been accustomed to 
purchase similar fabrics. 

2 As a rule the minutes do not mention the habitation of purchasers except in 
a few cases. Some of these include places such as Glasgow, Dundee, Linlithgow, 
Stirling, &c. 

3 Records of a Scottish Cloth Manufactory, § 270. 

4 Ibid., §§ 128-36. 

Div. IX. § 4 a] Organization of the Industry 1681-3 143 

of numbering each order of the managers — a plan that would have 
advantages for the modern secretary. 

The first steps, taken by the managers, consisted in the procuring of 
looms and other appliances and the still more difficult task of securing 
competent workmen. It was agreed that the men should be paid by 
piece-work \ Considerable difficulties were experienced in inducing 
hands to come from England, and it became necessary for some of 
the managers to go south to secure trained weavers^, some being 
brought from Yorkshire, others from the west of England. By July 
1681, a head of the works, called the " master of the manufactory" had 
been appointed, and in August the men had arrived at Newmills^ By 
October two looms were in operation though as yet only " coarse cloth '' 
was made^. Mixed cloth {i.e. cloth made of native and foreign wool) 
was ordered to be tried early in January 1682, and before the end of 
the month preparations were in train for the eventual production of 
fine cloth ^, directions being given that only the best wool should be 
purchased. As progress was made it was found that more plant was 
required, and estimates were considered on September 20th, 1682. By 
February 19th, 1683, ground for extensions was needed^ Meanwhile 
great care was taken of the quality of the cloth. By order of the 
managers, dated September 27th, 1682, no sales of serges or stockings 
were to be made at Newmills, all the goods made being sent to Edin- 
burgh^. In April 1683 the master was recommended "to take great 
care in improveing the spinning and dressing of the cloth that it be 
good and sufficient cloth, and that the rents and too near shearing of 
some cloth lately sent in be prevented in time coming^." All the cloth 
sent to Edinburgh was to be duly weighed and measured ^ The number 
of looms at work had now increased from two in 1681 to a total of 
twenty-seven, of which twenty-five were used for cloth and two for 
serges ^^. This plant proved insufficient to meet the demand, and about 
the same time ten new looms were ordered, which would bring the 
production up to 12,000 ells a year, the output being as yet only one- 
quarter of that calculated in the "Memoriall." In addition, after 
considerable trouble, some stocking-frames had been brought from the 

1 A Representation of the Advantages... of erecting Manufactories, ut supra, p. 18. 

2 Records of a Scottish Cloth Manufactory, §§ 208, 237. 

3 A Representation of the Advantages... of erecting Manufactories, ut supra, p. 18. 

4 Ibid., p. 12. 

^ Records of a Scottish Cloth Manufactory, §§ 107, 181. 

6 Ibid., §§ 213, 289. ^ Ibid., § 225. 

8 Ibid., § 303. For the meaning of shearing, vide the description of the method 
of manufacturing, ibid., pp. xix.-xxii. ^ Ibid., § 255. 

10 Ibid., § 307; A Representation of the Advantages... of erecting Manufactories, ut 
supra, p. 12. 

144 The Newmills Cloth Manufactory [div. ix. § 


west of England and were at work^ In 1684 the output had attained 
considerable volume, as the provision required for a single payment for 
materials was estimated to amount to 66^1,428. 9s. M. sterling 2, and th 
financial results appear to have been sufficiently satisfactory to justify 
the recommendation of the payment of legal interest on the stock 
immediately after the expiration of the first three years as provided in 
" the great contract^." As soon as the manufacture of fine cloth was 
established, a detailed estimate was framed of the prime cost of pro- 
duction, which gave the following results : 

Made into cloth 

Quality of wool measuring Total cost Cost per ell 

£ s. d. s. d. 

All Spanish At least 27 ells 19 7 3 14 4 

Half Spanish, half English „ „ 17 9 13 

All English „ „ 12 11 7 9 4 

Common „ „ 8 14 6 6* 

Meanwhile the company had been making efforts to secure the 
patronage of the Government for the provision of military uniforms, 
which were just beginning to come into vogue in Scotland, as an act of 
the Privy Council naively expresses it " to distinguish sojers from other 
skulking and vagrant persons^,'''' On February 22nd, 1683, the company 
were licensed by the Privy Council to import ^b^Q ells of stone-grey 
cloth from England for clothing General DalzelFs regiment of dragoons, 
as he could not procure as much cloth of the colour he required in 
Scotland. On the 16th of March this order was modified to the extent 
that General Dalzell might appoint any person he pleased to import 
the cloth on condition that the price should not exceed 5s. per ell, and 
that it should be sealed with the seal of the Newmills company^. It is 
evident from a consideration of the cost-price of the Newmills cloth 
that, at this date, it was not merely a " little dear "" but considerably 
higher in price than that made in England. Therefore cloth, imported 
at a maximum price of 5^. per ell, would mean an important saving in 
army clothing as the lowest cost-price in the foregoing table works out 
at nearly Qs. 6d. per ell. The managers of the company petitioned 
the Privy Council against this violation of the act of 1681, and on 
August 28th, 1684, representatives of the company were heard by a 
special Committee of the Council. It was asked whether the Newmills 

1 Records of a Scottish Cloth Manufactory, § 326. 

2 Ibid., § 482. Most of the terais employed are the names of dyes, e.g. 
'^mather" (madder), ^^argall" (argol), potash, copperas, cochineal, fustic. 

3 Ibid., § 450. * Ibid., § 352. 

^ Records of the Privy Council, quoted by Chambers, Domestic Annals of Scot- 
land, II. p. 419. 

6 Acts of the Privy Council of Scotland, 1682-5, f. 79. 



Div. IX. § 4 a] Contracts for Army Clothing 1683-6 145 

works could furnish enough cloth in a short time at reasonable rates for 
the forces, and the deputation undertook on behalf of the company to 
supply the army as quickly as cloth could be imported from England 
and at the same rates. They were also prepared to dye the cloth 
ordered any colour required, to show samples within a fortnight, and to 
give security for carrying out the contracts It would appear that this 
offer was not accepted, or if accepted, that licenses for the importation 
of English cloth continued to be given. A fresh permission was issued 
to General Dalzell on September 16th, 1685, to import 100 ells of stone- 
grey cloth at 9*. per ell, for the use of his officers, and 1,100 ells for 
soldiers at Qs. per ell'^. On January 8th of the following year the 
Captain of the Edinburgh Town Guard received a similar license for 
scarlet cloth, and on the same date, and again on February 3rd, further 
exemptions were granted to other officers ^ 

Not only had the company to face the loss of the government 
contracts it had anticipated, while still in its infancy, but it had many 
difficulties with its work-people. When it is remembered that the 
employees numbered over seven hundred, and that some of these had 
come from a distance, that others were foreigners, and that the native 
Scot had little sympathy with imported labour, it need occasion no 
surprise that much of the time of the managers and master was spent in 
settling disputes at the mills. They found " the country people very 
backward to anything new or strange and not easily drawn from their 
old way of living, though the new be more comfortable and better^."" 
Some of the skilled workmen not only would not obey orders but 
incited the others to quarrels, and it became necessary to ask the co- 
operation of the Provost of Haddington to have two discharged men 
removed from the districts Within the company matters remained 
harmonious. At first some of the managers did not attend the 
meetings regularly. This was remedied by the institution of a system 
by which each manager deposited two dollars from which the sum of 
sixpence was to be deducted for each absence^. At this time, and prior 
to the building of the company's hall, the meetings of managers were 
held in the back -shop of a John Little, and at various coffee-houses. 
At first some of the members were dilatory in paying in their sub- 
scriptions'', and others did not remove the cloth they had obtained by 
lot within the specified time^ Otherwise the minutes show that the 
internal working of the company was quite satisfactory. 

1 Acts of the Privy Council, 1682-5, flF. 473, 474. 

2 Ibid., f. 500. 3 Ibid., If. 646, 647, 670. 

* A Representation of the Advantages... of erecting Manufactories, ut supra, p. 10. 

^ Records of a Scottish Cloth Manufactory, § 244. 

6 Ibid., § 22. 7 lud., §§ 73, 135. « Ihid., § 241. 

S. C. III. 1^ 

146 The Newmills Cloth Manufactory [div. ix. § 4 a 

It was fortunate that the members were united, for difficulties had 
to be faced. The government had made a serious mistake in granting 
licenses for the import of English cloth, which tended to make the act 
of 1681 a dead letter. In any case, there were certain to be many 
evasions of the law as long as importation remained profitable. Owing 
to the system of the farming of the customs, the control of commodities 
imported had, to a certain extent, passed out of the hands of the 
government, and when the State itself set the example of making 
exceptions to its own legislation, it was to be expected that private 
persons would endeavour to bring English cloth into the country in 
spite of the prohibition. Noblemen, who travelled abroad, returned 
with many years' supply of foreign cloth, and it was said that their 
servants concealed considerable quantities which they sold^ As early as 
1683 the Newmills company became alarmed at the amount of cloth 
imported, and Sir James Stanfield was asked to use his influence with 
the officers of State in favour of a more strict adherence to the law 2. In 
August of 1683 a complaint had been made against the company, but 
was " superseded " by a proclamation in its favour, after which measures 
were taken against a number of Edinburgh merchants who were known 
to deal regularly in prohibited cloth. They had been invited to join 
the company on condition of taking up stock at par and paying a 
premium equal to the amount of interest which had not been withdrawn 
by the original proprietors. The " interlopers,'' however, as if to " show 
their incorrigibleness and obstinacy," "slighting so great a mark of 
clemency," imported more cloth in the few months after the proclamation 
than in the three years before. The Privy Council decreed that the 
goods should be seized and burned, besides which the offenders were 
condemned to pay a fine^. Only a few weeks later a member of the 
company. Councillor John Baillie, was found to have imported English 
cloth to the value of ^£"400 sterling, and it was decided that the cloth 
was to be burned by the common hangman, and his stock in the 
company forfeited^ The company saw the expected monopoly slipping 
away, and in 1685 the managers complained that they were in danger 
of being "utterly ruined and broke ^" On March 4th it was decided to 
call a general meeting to consider whether the undertaking should stand 
or be dissolved ^ Probably this language was exaggerated, inasmuch as 

^ Parliamentary Papers, 1702 — Memorial concerning the State of Manufactures 
before and since the year 1700. 

2 Records of a Scottish Cloth Manufactory, § 271. 

3 Chambers, Domestic Annals of Scotland, ii. pp. 420-1. 
* Chronological Notes of Scottish Affairs from 1680-1701, by Lord Fountainhall ; 

Edinburgh, 1822, p. 91. 

^ Chambers, Domestic Annals of Scotland, ii. p. 420. 
« Recwds of a Scottish Cloth Manufactory, §§ 640, 646. 


Div. IX. § 4 a] Imports of Prohibited Cloth 1683-6 147 

a dividend had been paid in the May of the previous year, but it 
impressed the Privy Council, which had to face the alternatives of either 
allowing the act of 1681 to become a dead letter, or else taking measures 
to enforce it. Eventually it was decided to adopt the latter course, and 
the company was requested by the Lord Secretary to submit a statement 
of its grievances for the consideration of the Privy Councils The 
address and memorial were remitted to a committee, which reported on 
August 7th, 1685, and the Privy Council, by an act of August 14th, 
explicitly ratified the forfeiture of the interest in the company of any 
member who imported prohibited cloth. It further forbids, under 
heavy penalties, the importing, wearing, or selling of all foreign cloth 
and serges, silk gloves and stockings, as well as worsted stockings. The 
company, or its agents, had full powers to seize any of the prohibited 
goods, to sue persons contravening the act before any competent 
tribunal, and to retain one-half of the penalty to defray expenses of 
the seizure. In cases of doubt as to whether certain commodities were 
native or foreign, the possessors of such goods were compelled to declare 
on oath from whom they had obtained them. As a further encourage- 
ment to the company, the Privy Council agreed to cease the granting 
of licenses for the importing of English cloth to supply the troops, 
on condition that the company should produce sufficient quantities 
of the required colours, and at a rate to be agreed upon by the 
company, with the proviso that, in case the price asked was found to 
be too high, the Privy Council reserved the right of proposing a new 
rate for the contracts 2. On September 11th of the same year a further 
addition was made to the powers of the company by the grant of 
authorization of breaking open doors, chests, or other places where 
prohibited goods were suspected^. Early in the following year a King's 
letter and proclamation was issued on behalf of the company ^ 

Though the extensive powers, conveyed by these documents, afford 
an instance of the commercial policy of the times, the methods of 
obtaining them, and the consideration given, constitute a curious side- 
light on the ethical standard of the age. These are set down in the 
most naive manner in the minutes of the managers, just as the various 
"gratifications" given by the East India company during the early 
years of its history are recorded in the court books. "Mr Colling 
M'Kenzie " received five guineas on account of the great care and pains 
he had taken in procuring the first act of the Privy Council, and 
various subordinate persons were paid smaller sums, ranging from one to 

1 Records of a Scottish Cloth Manufactory, § 624. 

2 Acts of the Privy Council, 1685, ff. 137, 138. 
I 3 iiicl., f. 168. 

* Records of a Scottish Cloth Manufactory, § 793. 


148 TJie Newmills Cloth Manufactory [dtv. ix. § 


six dollars ^ The sum of <^15 sterling was remitted to London, partly 
to "gratify"" persons who had aided the company, partly to pay 
expenses ^ On the bill "anent freedom of trade'' being sent to the 
King, an official expected to be gratified, and it was ordered that he 
should be offered a pair of silk stockings " if that will satisfy him,'"* if 
not, four dollars and one dollar for his man. The following resolution 
speaks for itself : "It being represented '' to the managers " that the 
King's Advocat drawes thess lybells against the transgressours wrong 
because he is not informed," persons were to wait upon and inform him, 
and at the same time give him ten dollars for himself and his men two 
dollars each, and " ingadge " him in time to come^ 

From the grant of extended privileges until the Revolution the 
company enjoyed a considerable degree of prosperity, and, apart from 
prosecutions of transgressors, it was able to give greater attention to its 
internal affairs. It was a common complaint amongst early Scottish 
companies that the expense of skilled labour was very great. At the 
end of the year 1686 an attempt was made to arrange a scale of piece- 
work wages, which was under no circumstances to be exceeded. The 
weavers of the coarsest white cloth were not to receive more than 5d. 
per ell, the highest wages for weaving Spanish wool were not to be more 
than 14d per ell, while the shearmen were to receive from Bd. to 
Sd. per elP. The friction was not confined to the hands, for it was 
frequently necessary to remonstrate with more important officials of the 
company. The cashier was charged with partiality in the allocation of 
the payment for piece-work, and it was ordered that, in the event of 
any unjust distribution in future, six times the amount that he had 
underpaid or overpaid the men should be deducted from his own wages ^ 
It was necessary to " discourse and reason " with the master about his 
method of dyeing fine black cloth ^, and also to compel him to instruct the 
apprentices in dyeing so as to carry out the obligations of the company 
under the act of 1 681 ^. 

During this period the company had protracted negotiations with 
Sir James Stanfield. In 1681 he was a wealthy man, but owing to 
the extravagance of his eldest son (who was later executed for parricide) 
he was gradually falling into pecuniary difficulties. On March 1st, 
1686, he proposed to sell his interest in the land and buildings at 

1 Records of a Scottish Cloth Manufactory, § 724. ^ ji^id^^ ^ 793. 

3 Ibid., § 1028. It is not easy to distinguish ''^gratifications" given for a 
consideration from those of the nature of a bribe. The following appear to be 
instances of the latter class: §§271, 272 (''a compleament to the officers of 
State"), 356, 508, 541 (for ''favouring" the company in not "casting" army 
clothing supplied by it), 564, 571, 597, 623, 681, 724, 848, 883, 1183. 

4 Ihid., § 920, p. 141. 6 iiid,^ g 932. « md., § 993. ^ /ft^-^.^ § 423. 

Div. IX. § 4 a] Progress at the Works 1686-7 149 

Newmills to the company^, and on the 14th of May he was paid for 
certain goods he had handed over to the joint-stock undertaking^. The 
following year he offered his stock in the company on similar terms to 
that obtained at the previous sale. He also notified the managers that 
he claimed that the privilege of furnishing cloth for the troops should 
be divided between the existing company and a new one which he 
proposed to set up in proportion to the number of looms owned by 
each^ Owing to Stanfield's death soon afterwards, nothing more is 
heard of the proposed rival company. The purchase of the land and 
buildings at Newmills, though not effected during his lifetime, was 
carried out soon afterwards, as it became necessary to realize the estate 
to satisfy the creditors, but it is impossible to determine the date, as 
his affairs were still in bankruptcy in 1703^ It was not long before 
there was another attempt at competition at Newmills. A former 
servant of the company, named Spurroway, had taken the house at 
Newmills with a view to establish cloth works. The company felt it 
would be a " great have another work ther," and so a 
message was sent to Spurroway desiring " hime to keep up that good 
understanding hes bein betwixt hime and the company ever to this day, 
and if he cannot be prevailled with in a fair way to pass from it, to 
tell hime the company will take ther oune way to prevent his entering 
ther, and will reakon themselves very much disobledged by such methods 
quhich they hope he will prevents" 

Meanwhile the undertaking continued to make progress. The 
practical monopoly of supplying cloth for the army began to prove 
profitable. Mention is made of a contract for a troop at Edinburgh, 
to supply ready-made coats at 22*. each, when £Q sterling was allowed 
for making one hundred and twelve coats (or about 1*. per coat), the 
remaining £\Y{ being for cloth ^. It is interesting to notice that on 
the eve of the Revolution the garrison at the Bass was clothed in cloth 
made at Newmills''. One seems to obtain a glimpse of the possibility of 
a secret profit at the expense of the government in the sale of some coarse 
cloth, which had been in the warehouse for four years, to Lieutenant- 
General Douglas. This cloth had been valued at Qs. Sd. per ell, 
but was now sold at 4*. ^d. sterling ^ In 1687 the output was again 
increased by the erection of a large twisting-milP, but against this is 
to be set the fact that the attempt to produce machine-made stockings 
had yielded little or no profit, and the frames were ordered to be sold 
by public roup^^ 

1 liecords of a ^Scottish Cloth Manufactory, § 797. ^ Ibid., § 828. 

^ Ibid., § 988. ^ Dictionary of Legal Decisions, p. 12,614. 

^ Records of a Scottish Cloth Manufactory, § 1211. ^ Ibid., § 1320. 

' Ibid., ^ 1139. 8 ji)ici^^ § 1030. '^ Ibid., § 1007. ^^ Ibid., § 1122. 


150 The Newmills Cloth Manufactory [div. ix. § 

With the Revolution there came a temporary set-back in the 
progress of the company. During the unsettled times before the 
government of William III. was fully established, foreign cloth was 
again imported with very little hindrance. Such importation was tacitly 
recognized by an act of Parliament of 1690 which granted the magis- 
trates of Edinburgh an impost of 12,y. Scots per ell on imported English 
or foreign clothe In 1693 the company was incorporated by act of 
Parliament under the title of the Incorporation of the Woollen Manu- 
factory at Newmills in the Shire of Haddington. This act recites that 
the undertaking had been subject to many discouragements and confirms 
the privileges of the act of 1681, and in addition confers exemption 
from customs for twenty-one years. It was also provided that an entry 
in the books kept in Edinburgh and in London should be sufficient 
evidence of ownership of shares^. By another act of the same year it 
was provided that the army should wear cloth made in Scotland, under 
similar conditions to those laid down by the Privy Council in 1685 ^ 
In 1695 the company was exempted from taxation ^ 

Since the Revolution the stringent legislation against the import of 
foreign cloth and the export of Scottish wool, though not repealed, 
had come to be neglected. It may have been that the government felt 
that after nearly ten years of protection the Newmills company and 
other makers of fine cloth should be able to face foreign competition, 
but it is more probable that during the change of administration it was 
inconvenient to enforce these laws. Opinions as to the effect of the 
relaxation of protection were biased according to the interests of the 
persons who expressed them. It appears that the export of manu- 
factured cloth had fallen very seriously. In 1674, 400,000 ells of 
plaiding had been exported from Aberdeen, and in the year 1694-5 
the quantity for the same district had fallen to 80,000 ells. The price 
realized too was lower, owing to the fact that the best wool was 
exported and the home manufacturers were left with the refuse. There- 
fore both the quantity and quality of cloth produced had declined^. 
Arguments of this nature had weight with the Parliamentary Com- 
mittee of Trade, and it was resolved to encourage a number of industries, 
including the Newmills manufactory. A note was appended to the 
resolution stating that the persons concerned in that manufacture had 
permission to bring in such acts as they thought fit^. At first it was 
proposed that the duty on imported cloth should be increased by 

^ Acts of the Parliaments of Scotland, ix. p. 206. 

2 lUd., IX. p. 818. 3 11^^^^ IX. p. 319. 4 /6jflf.^ IX. p. 371. 

^ Parliamentary Papers, 1702 — Memorial concerning the State of Manufactures 
before and since the year 1700. 

'^ Parliamentary Papers, circa 1695 — List of Acts to be desired. 


Div. IX. § 4 a] The Retur7i to Prohibition 1690-9 151 

12*. Scots, and that on serges by 6s. Scots ^ but the manufacturers were 
still anxious to obtain a complete prohibition of imports. Accordingly, 
on October 8th, 1696, the Newmills company presented a petition 
stating that " the undertakers had advanced to that perfection that 
they were able not only to make woollen cloth as good as is made in 
any other nation but also in such quantities as may serve the kingdom 
and all ranks and degrees of persons within the same." It was pointed 
out that the act of 1681 prohibiting foreign cloth, as well as subsequent 
confirmatory acts of the Privy Council and the Lords of the Exchequer, 
had never been expressly rescinded. But an " allowance or practice ""^ of 
importing foreign cloth had come into vogue "to the great discouragement 
of the company." It is therefore asked that the act of 1681 should be 
revived, especially as the company was prepared to be inspected by the 
Privy Council " and at their sight to make sufficient quantities of cloth 
and at reasonable rates for serving the whole kingdom, which was never 
formerly offered by any other manufacturer in this nation^." The 
petition was remitted to the Committee of Trade to bring in an act, 
and the draft act was read a first time on October 8th ^. On August 4th, 
1698, the Committee of Trade adopted the view that the importation 
of foreign cloth was a great discouragement to the existing manu- 
factories, and the prohibition of imports of it was recommended^ 
Accordingly, overtures for acts, prohibiting the importation of cloth 
and the exportation of wool as well as for encouraging the woollen 
manufacture, were presented to Parliaments Meanwhile the strength 
of the opposition to the existing state of affairs was increased by the 
foundation of several other woollen works, and finally in June 1699 
the exportation of woollen yarn was prohibited by an act of the 
Privy Councils Gradually the policy of a return to prohibition was 
making headway. It was believed that one reason of the decrease in 
exports was the deficient quality of the cloth exported. One writer 
stating that a thousand times as much could be sold abroad if it were 
rightly made''. Accordingly an overture for an act for measuring and 
sealing linen and woollen cloth came before Parliament in 1700, which 
proposed that all pieces of cloth should be of equal length, consisting 

^ Acts of the Parliaments of Scotland, ix. p. 460. 

2 Parliamentary Papers, Oct. 8, 1G96— Petition of the woollen manufactory at 
Newmills anent the import of foreign cloth. 

3 Acts of the Parliaments of Scotland, x. p. 67. 

* Parliamentary Papers, 1698— Minutes of the Committee of Trade. 

° Parliamentary Papers, 1698— Overtures for Trade ; Acts of the Parliaments of 
Scotland, x. pp. 146, 147. 

^ Parliamentary Papers, 1701 — Exporting of wool. 

^ A Scheme of Scotland's product and manufactures, p. 20 [Advocates' Library, 

152 The Newmills Cloth Mamifactory [div. ix. § 4 Ai 

of a definite number of ells^! No cloth could be legally sold unless it 
was sealed by the official sealmaster, who was bound to seal only such 
cloth as was declared to be made at home. As in the act of 1685 
in favour of the Newmills company, the sealmaster had the right of 
administering an oath, and he could compel persons, bringing cloth 
to be sealed, to declare the name of the weaver and his place of 
residence. Cloth, not distinguishable from that made abroad, was 
subject to forfeiture ^ In 1701 the manufacturers addressed a petition 
to Parliament against the continued export of wool. They stated that 
the woollen industry at one time employed 50,000 persons and produced 
,^10,000 sterling a year and it is now in danger of being destroyed. 
Exports had ceased to be profitable, indeed those made recently had not 
realized half the prime cost^. Prior to the export of wool, manu- 
factured cloths and stockings had been sent abroad from " the north 
country and Stirling," but at this date the trade had ceased and the goods 
were rotting. A class of cloth, known as " Galloway whites,''"' had at 
one time been sold abroad in large quantities. This continued till 
sheep skins began to be exported, and now not a single pack of Galloway 
whites was shipped ^ This and other representations at length had 
weight with Parliament, and in 1701 an act was passed confirming the 
previous prohibitions of the wearing or importing of foreign cloth as well 
as the export of yarn. The chief addition to the previous acts of the 
Privy Council was the provision that, instead of any cloth seized under 
the act being destroyed, it was now to become the property of the 
informer, on condition that he gave security to export it within six 
months ^ 

The passing of this act ended for a time the more pressing difficulties 
of the cloth manufacturer. How far the Newmills company had 
suffered from the neglect of the act of 1681 between 1689 and 1701 
it is difficult to determine. Curiously enough the first series of the 
minutes ends about the earlier date and the second part only begins at 
the later one. On June 4th, 1701, it is recorded that in 1699 certain 
of the salaries at Newmills had been reduced owing to " the work being 
low^," and in the petition presented to Parliament in 1696 the company 

1 Parliamentary Papers^ 1700— The number of ells in the piece is left blank. 

2 Parliamentary Papers^ 1700— Overture for an Act for measuring and sealing 
of linnen cloth ; Acts of the Parliaments of Scotland , x. App. p. 228. 

^ This statement is confirmed by the second series of the minutes, whence it 
appears that cloth sent to Holland for sale there was returned unsold (November 4, 
1702, Records of a Scottish Cloth Manufactory, p. 327); Scotland's Interest: Or the 
Benefit and Necessity of a Communication of Trade with England, 1704, pp. 5, (j. 

4 Parliamentary Papers, 1701 — Reasons against Act allowing the export of wool. 

^ Acts of the Parliaments of Scotland, xi. p. 190. 

^ Records qf a Scottish Cloth Manufactory, p. 2.56. 

Div. IX. § 4 a] Profits in the Cloth Trade 1689-1703 153 

stated that it had suffered great discouragement. Probably the least 
reliable information as to the financial condition of any undertaking 
would be its own account, given either to servants when their wages 
were to be revised or to Parliament when further encouragement was 
to be sought. No doubt the conflicting practices of customs-officials 
must have been very perplexing, and a complete system of non-prohibited 
imports of cloth would have been better than one under which English 
and foreign cloth was sometimes admitted, sometimes stopped. This 
must have meant a very serious inconvenience to the manufacturer, and 
the Newmills company, besides, had now to face the competition of 
other Scottish companies. The very fact that so many of these had 
been founded before 1701 affords indirect evidence that the cloth trade 
was considered to have favourable prospects, even before the legislation 
of that year. This conclusion is confirmed by a comparison of the later 
with the earlier Newmills minutes. The volume, beginning in 1701, 
shows that the business had grown during the interval. The capital 
had been increased, the quantity of cloth made was greater and the 
purchases of wool were larger. Besides it happens there is record of a 
transaction that gives some information as to the dividends actually 
declared. By January 20th, 1703, it would appear that the four 
previous dividends had amounted to 13, 10, 11, and 18 per cent, 
respectively or a total of 52 per cent.^ This clearly shows that even 
before 1701 considerable profits were made. 

Despite the competition of younger undertakings, the Newmills 
company seems to have held its own. By its constitution it dealt 
directly with the leading cloth merchants, and these, being members of 
the company, secured it a respectable sale of its goods. Then, too, it 
continued to obtain a share of the government contracts for cloth. 
But the great difficulty the business had to contend with at this date 
was the stringency of the local money-market. Debtors paid very 
slowly, the exchange abroad was adverse, and even the government 
owed the sum of <^1,952. 14*. M. sterling for over ten years to the 
managers, this sum being about 20 per cent, on the issued capital 2. 
The State in other respects continued to support the company by 
granting exemption from taxation. Thus in 1702, in the act levying 
a ten and a half months' cess on land-rent, " the lands of Newmills 
belonging to the woollen manufactory" are excepted, and a similar 

1 Tliere is some doubt as to the dividend of 13 per cent., but the others are 
mentioned in the minutes, vide Records of a Scottish Cloth Manufactory, pp. 336, 337 

2 Collection of Petitions to the Barons of the Exchequer (University Library, 
Edinburgh, Laing MSS., No. 488, Div. ii. )— Petition of the managers of the manu- 
factory at Newmills (1701). 

154 The Newmills Cloth Manufactory [div. ix. § 4 a 

privilege is recorded in the act of 1704 for a six months' cess, also in that 
of 1705 for a seven months' cess^ 

One effect of the act of 1701 is said to have been towards increasing 
the amount of cloth exported, which had grown from 80,000 ells in 
1694-5 to 200,000 ells in 1702-3, from the same district 2. The balance 
of opinion was favourable to the quality of cloth made at this period. 
One writer says that the cloth industry had, by 1700, arrived at 
" a very good degree of perfection,'' adding that " it is not to be 
expected that a child new-born should do all things as a man of perfect 
age, and therefore we are bound to have patience and cherish children 
till they attain to vigour so as to serve us — and so we must do with 
our manufactures ^" Another author is of opinion that " woollen-cloth 
is now made as good as may serve the uses of the country^. Others 
were convinced that the industry had progressed far beyond what could 
have been expected in the comparatively short time since its inception ^ 
In other quarters the judgment was far from being so decisive. The 
propounder of Reasons general for a Sumptuary Law held that "Scots 
manufactures are so little specious when compared to the gaudy im- 
ports, that what is manufactured in Scotland will not be used but 
contemned by the vain — and that is (in experience) almost alP." The 
minutes of the company show that, through laxity at the works, there 
was considerable cause for complaint. In 1702 "scrimp" measure had 
created " a great deall of clamour and trouble," and in the following 
year there was much annoyance through the ill-milling of the cloth, 
which was said to be "full of holes^." Though the prohibition of 1701 
was received at first " with much popular applause and alacrity," it was 
not long before there was dissatisfaction because every man did not 
immediately experience the advantage he would gain^ In all proba- 
bility, in view of the reduction of prices from 1695 to 1700, the plain 
man would need much argument to convince him of the benefit he 
would derive from any increase that might be made, on the return 
to complete protection. At the same time it is worthy of note that it 

1 Acts of the Parliaments of Scotland, xi. pp. 21 _, 138^ 296. 

2 Parliamentary Papers, 1702 — Memorial concerning the State of Manufactures 
before and since the year 1702. 

^ A Letter to a Member of Parliament, Edinburgh _, 1700, p. 16. 

* MS. Discourses anent the improvements may be made in Scotland [Advocates* 
Library, Wodrow MSS., 33. 5. 16], f. 15. 

^ Parliamentary Papers after 1702 — Answers to a memorial given in by the 

^ Parliamentary Papers, 1698. 

^ Records of a Scottish Cloth Manufactory, pp. 322, 344. 

8 A Speech without Doors concerning the Eocportation of Wool, Edinburgh, 1700, 
p. 8. 


IV. IX. § 4 a] The Wool and Cloth Trades 1700-4 155 

is recorded after 1700 that the tendency on the whole was towards lower 
prices for clothe 

From the beginning of the eighteenth century to the Union, the 
history of the Newmills company is embraced in the wider movement 
of the legislation affecting wool. In 1703 two draft acts were brought 
before Parliament, the one for the measurement and sealing of cloth and 
the other to prohibit the importation of foreign wool 2. Against these, 
an overture for an act was considered which provided for the encourage- 
ment of woollen manufactories'^. Such overtures represented the struggle 
between the manufacturing and land-owning interests. The prosperity 
of the proprietors of Galloway and Roxburgh largely depended on the 
prices realized for wool, and freedom of exporting meant a high return 
as against a low one when the wool must be consumed at homel From 
the point of view of the manufacturer the prohibition of the export of 
wool was a necessity not only to provide him with cheap raw material 
but also to limit the supply of wool available for the foreign producers 
with whom he must compete if he exported his cloth. 

The wool-masters secured a small advantage by endeavouring to 
obtain permission to export sheepskins with the wool on them^ The 
manufacturers presented a petition showing that the proposed act meant 
the re-introduction of the export of wool^, and they were joined by the 
skinners and shoemakers. However, the export of skins was permitted 
under the condition that shipments should be limited to Borrowstounness, 
Port-Glasgow and Dumfries ^ In 1704 the case of the wool-masters was 
carried a stage further by the promotion of a draft act allowing the 
export of wool. Against this the manufacturers were heard before 
Parliament. They represented that " on the faith of former laws, which 
were even but temporary, they erected manufactories at great charge, 
and now to bring in an act which entirely overturns them seems to 
be a hardship the like whereof has been unprecedented I"" There was 
considerable debate on the clauses of the act, which was finally passed 
in the form of allowing export of wool, while the prohibition of the im- 
portation of cloth was again re-enacted ^ At the same time the export 

1 Parliamentary Papers after 1702— Memorial concerning the State of Manu- 
factures before and since the year 1700. 

2 Acts of the Parliaments of Scotland, xi. pp. 46, 80, 81. 

3 Ibid., p. 63. 

4 The History of the Union of Great Britain, hy Daniel Defoe, Edin. 1709, p. 123. 
^ Acts of the Parliaments of Scotland, xi. p. 111. 

6 Parliamentary Papers, 1703 — Export of Skins. 
^ Acts of the Parliaments of Scotland, xi. p. 111. 

8 Parliamentary Papers, 1704— Tlie Petition of the Manufacturers of this King- 
dom against permission to export wool ; Acts of the Parliaments of Scotland, xi. p. 177- 
^ Acts of the Parliaments of Scotland, xi. p. 190. 

156 The Newmills Cloth Manufactory [div. ix. § 4a 

of Scottish cloth was exempted from duty, and this was recognized as 
some compensation to the manufacturer \ 

These acts constituted a complete triumph to the wool-masters, and 
at the same time a very serious blow to the undertakers of woollen 
works. According to Defoe, " the shipping off of the wool from 
Scotland... was a mortal wound given to the industry of the people, 
discouraging all attempts of manufacturing among them.'*'' The re- 
commencement of the exportation of wool was coincident with the 
cessation of the exportation of cloth to Sweden and the Baltic, for " the 
Swedes now took their wool from Scotland which they had not been 
used to do, by which it was apparent, they (having the wool) made the 
manufactures themselves, and this was a dead loss to Scotland just so 
much as the employment and labour of the poor amounted to I" 

These events were unfortunate for Scotland when commercial relations 
with England came to be adjusted at the Union. For many years past 
it had been the fixed policy of England to discourage the cloth trade 
elsewhere and concentrate it at home. For instance, in 1698, the House 
of Commons, noticing the growth of the woollen trade in Ireland, stated 
in a petition to the king, that " it behoves them like their ancestors 
to be jealous of the establishment and increase of this trade elsewhere^." 
Accordingly, by a King^s letter, the government in Ireland was directed 
to discourage the woollen trade and encourage the manufacture of linen''. 
The same policy was now to be applied to Scotland, but with this differ- 
ence, that Scotland was in a stronger position than Ireland had been in 
bargaining for compensation in respect of losses through the abandon- 
ment of the fine cloth trade. England, in conformity with a definite 
policy, required the prohibition of the export of wool, and therefore 
some compensation was awarded to the wool-masters, affected by the 
change, through subsidies to the manufacture of coarse cloth. It was 
widely felt that there was a hardship to Scottish producers in the 
destruction of the fine cloth works already established. For, with 
freedom of trade between the two countries, English cloth ceased to 
be prohibited, and it was sold at much lower prices than the home 
product^. At the same time it must be remembered that Scotland 

1 Acts of the Parliaments of l^cotland, xi. App. p. 53. 

^ History of the Union, ut supra, p. 123. 

'^ Vide supra, p. 102. 

* State Papers — Public Record Office, DubHii, King's and Queen's Letters, under 
July 7, 1698 ; Carton 178, No. 3779. 

" Defoe, History of the Union, ut supra. Appendix, Part i. p. 36. This is con- 
firmed by Adam Smith ( Wealth of Nations, Book i. ch. xi. ed. Nicholson, p. 99), 
who states that the price of wool fell '' very considerably " after the Union. ITie 
loss to the land-owners, he adds, was made good by a rise in the price of meat. 
William Paterson in 1706 mentioned the cloth trade as one of those which was 

Div. IX. § 4 a] The Cloth Trade and the Union 1707 157 

could only be compensated once for the same thing. Granting the 
export of wool, for the cessation of which compensation was given, it 
was impossible that allowance should be made for the loss of protection 
to the fine cloth manufacture, for this trade had already been very 
seriously endangered by the same permission of freedom of exporting 
wool. In fact there were, up till 1704, two avenues possible for a claim 
for compensation. One was the continuation of the prohibition of the 
export of wool, in which case there would have been grounds in equity 
for allowances to be made to the manufacturers of broadcloth for the 
loss of protection against English imports. In view of the anxiety of 
England to secure the cloth trade, it is possible the Scottish position, in 
bargaining on the terms of the Union, would have been stronger on this 
than on the grounds that had to be taken up, namely, the loss of the 
right to export wooP. 

After the Union some of the early manufactories turned their 
attention to the production of inferior cloth, and petitions were pre- 
sented from Wm. Hogg of Harcarse and the Musselburgh company, 
making certain offers in return for grants from the Equivalents The 
Newmills company does not appear to have made any attempt to adapt 
itself to the changed circumstances, and preparations were made for the 
winding up of the company. The necessary steps could only be made 
very slowly, as there was difficulty in obtaining payment of some long 
outstanding accounts due by the government for army clothing S At a 
meeting held towards the end of February 1711 it was decided to accept 
proposals from intending purchasers of the lands of Newmills, the dead 
stock and privileges of the company^ Meetings of the members were 
called for the 3rd of June, the 11th of June, and the 28th of June of 
the same year^. In February 1712 the property was again advertized 
for sale with the hall of the company in Edinburgh I Early in May it 
was announced that the sale had been adjourned ^ Evidently there 
was important business for which it was difficult to obtain a quorum, 
for, during the last days of October an advertisement was published 
to the effect that " the proprietors of the Newmills Manufactory are 
entreated to meet at their hall on Monday November 3rd at 2 o'c. 

likely to gain by the Union {An Enquiry into the Reasonableness and Consequences of 
an Union with Scotland, 1706, p. 123). 

1 Some particulars of the general effects of the Scottish protective policy are 
given in an article on this subject in The Scottish Historical lieview (January 1904), 
I. pp. 173-90. 

2 A Collection of Petitions to the Barons of the Exchequer (University Library, 
Edinburgh, Laing MSS., No. 488, Div. ii.). 

2 The Dictionary of Legal Decisions, p. 1400. 

* The Scots Courant, Nos. 853, 880. ^ J bid., Nos. 894, 895, 981. 

6 Ibid., No. 1010. 7 ji,id,^ No. 1041. 

158 The NewmilU Cloth Manufactory [div. ix. § 4 a 

in the afternoon anent special affairs of the company ^'*'' As a result 
of this meeting it was decided to offer the property in separate lots, 
and, in the next issue of the Scots Coura7it, the lands of Newmills were 
advertized for public sale, and "the proprietors were entreated to be 
present at the roup^ " on December 1st at S o''clock. The hall was 
to be rouped on the 8th, but subsequently the sale was adjourned to 
February 16th, 1713^ Just before the sale of the hall, a drawing of 
the remaining cloth by lot was held on February 2nd^. Last of all, 
on March 20th, the machinery and plant were sold. It comprised tools 
for the manufacture of broadcloth, " such as shifFers, cards, hand-stocks 
with and without teasels, weavers'-looms, spinning-wheels, weavers'- 
shuttles, weavers' reeds, reels, sheer-boards and dubbing boards, brushes, 
burling tables, tenters, iron stove, two hot presses, one cold press, press- 
ing planks, pressing papers, also Spanish wool dyed several mixtures^'"* 

The lands of Newmills were purchased by Colonel Charteris and he 
changed the name to Amisfield, so that, with the winding-up of the 
company, the designation of its property disappeared. 

B. Other Woollen Manufactories. 

Woollen Manufacture at Glasgow (James Armour), 1683. 

Woollen Manufacture at Paul's Work, Edinburgh, 1683- 

Woollen Manufacture at Musselburgh, (?) 1695. 

Woollen Manufacture at Aberdeen, 1696. 

The Woollen Manufacture of Glasgow (Wm. Cochrane), 

Woollen and Linen Manufactory of John Corse, Glasgow, 

William Hog's Manufacture, (?) 1702-3. 

The Woollen Manufacture of North-Mills, Aberdeen- 
shire (Wm. Black), 1703. 

Lyell's Manufactory at Gairdin, 1704. 

In addition to the Newmills company, there was a large number 
of other cloth works, some of them of considerable importance. In 
fact, owing to the advantages given by the act of 1681 for encouraging 
trade and manufactures, as well as the special privileges obtained by the 

1 The Scots Gourant, No. 1112. 2 n^i^^ No. 1118. 

3 Ibid., No. 1147. * Ibid., No. 1145. ^ Ibid., No. 1166. 

Div. ix.§4b] Glasgow & Edinburgh Cloth Cos. 1683-1708 159 

Newmills company, people had turned their minds and stocks by prefer- 
ence towards the woollen traded In 1683, the privileges of a manu- 
facture were granted to the undertaking of James Armour at Glasgow, 
which was intended to produce serges and other kinds of cloth I There 
is no record as to the success or failure of this venture, but it would 
appear that it did not ruin the promoter, as a James Armour, of 
Glasgow, was associated with Chamberlain in the proposal for establish- 
ing a Land Bank ^ 

In 1683, the privileges of a manufacture were granted to a broadcloth 
manufactory at Paul's Work, in Edinburgh, which had already been in 
operation. This undertaking had been established by a partnership 
of several persons, and evidence was produced before the Privy Council 
to show that the whole process from the purchase of the rough wool, 
including dyeing and mixing, up to the delivery of broadcloth was 
performed in the factory and that the cloth had gained the approval 
of the merchants of Edinburgh "*. It is by no means easy to differentiate 
this company from the Scots Linen Manufacture, which also had build- 
ings at PauFs Work^ The company of 1683 is said to have made 
linens as well as cloth ^, and, therefore, when Dupin was forming his 
linen company in 1690, he may either have acquired the premises of the 
older concern, or again, the two businesses may have co-existed side by 
side — the address of each being " PauPs Work."'"' On the whole, it seems 
that the advertisement quoted below'', with reference to the sale or 
feuing of PauFs Work, related to this rather than to the buildings 
occupied by the Linen company, because, in the description, there is 
no reference to linen, and there is mention of the Bonnington Mills, 
which had long been used for the production of cloth. The undertaking 
offered for sale in 1708 had a subsidy from the Town Council of Edin- 
burgh for the teaching of apprentices — a kind of grant given to many 
of the woollen factories. 

For over ten years, no records of new cloth works have come to light. 
The reason for this, as well as the starting of numerous undertakings 
from 1695 to 1705, is to be found in the attitude of the State to the 
importation of foreign cloth and the exportation of wool^ As soon 
as there were grounds to expect that a return would be made to the 

* Parliamentary Papers, 1702 — Memorial coiiceriiiiig the State of Manufactures 
before and since the year 1700. 

^ Acts of the Parliaments of Scotland, viii. p. 361. 
3 Vide infra, Division x., Section 3. 

* Decreta of Privy Council of Scotland, f. 181. 
^ Vide infra, Division ix.. Section 4c. 

^ Warden, Linen Trade, p. 428. 

7 Vide infra, p. 169. * Vide supra, pp. 153-5. 

160 The Glasgow Cloth Manufactory 1699 [div. ix. §4b 

protectionist policy in vogue from 1681 to 1685, new woollen companies 
began to be created. Works had been established at Musselburgh, by 
a Gilbert Robertson, of Whitehouse, who, in 1695, petitioned Parlia- 
ment for the same privileges that had been granted to the Newmills 
company. He stated that he had been very well encouraged by the 
success of his labour, and was resolved to extend his works by assuming 
others in partnership ^ In 1703, the same request was again preferred, 
and by that time the undertaking had grown. " Many hundreds " of 
work-people were employed"^, and, by the inclusion of a number of 
partners, a considerable stock had been adventured^. 

In 1696, a company, consisting of a moderately large membership, 
was established in the city of Aberdeen ^ 

An influential company was formed in Glasgow in 1699, consisting 
of ten persons, including William Dunlop, principal of the University ; 
Mungo Cochrane, a distiller; and several ship-owners. It proposed "to 
make woollen stuffs of all sorts, such as damasks, half-silks, draughts, 
friezes, drogats, tartans, craips, capitations, russets, and all other stuffs 
for men and women's apparel, either in summer or winter."*"* It was 
expected that this varied assortment of products could be sold "at 
an easie rate,"*' and, to secure a high standard of workmanship, "able 
artists " had been brought from abroad. The company sought special 
consideration from the Privy Council in view of the fact that =^10,000 
sterling was annually paid to Ireland from the south and west of 
Scotland for woollen goods, which would now be made at home**. A 
similar petition was presented to Parliament for the privileges of a 
manufacture, under the act of 1681 **. This company soon made rapid 
progress, and about the year 1700 it employed 1,400 persons, this being 
the largest number recorded as receiving wages simultaneously from any 
one firm''. In 1704, this company took the lead, as the premier cloth 
factory, in petitioning Parliament for a more liberal policy towards the 
manufacturers^. From 1704, there is no further mention of this under- 
taking; as already shown, being a producer of fine woollen goods, it 
would have suffered by the Union, and when later efforts were made 

^ Parliamentary Papers, 1695 — The Petition of G. Robertson. 

2 Parliamentary Papers, 1702 — Memorial concerning the State of Manufactures] 
before and since the year 1700. 

3 Acts of the Parliaments of Scotland, xi. p. 81. 
* Chambers, Domestic Annals of Scotland, iii. p. 155. 
s Ihid., III. pp. 126, 127. 

^ Parliamentary Papers, undated — The Petition of William Cochrane. 
5" Parliamentary Papers, 1702 — Memorial concerning the State of Manufactures 

before and since the year 1700. 

^ Parliamentary Papers, 1704 — Proposals in favour of the Woollen Manu- 
factories and particularly that of Glasgow. 

Div. IX. § 4b] Relations between Cloth Cos. 1701-3 161 

to start the industry again in Glasgow, such efforts were regarded as 
founding the trade anew. Another woollen factory, which had a branch 
for making linen, was started in 1700 by John Corset 

The second series of the minutes of the Newmills company, which 
begins in 1701, presents some interesting side-lights on the condition of 
other cloth factories. Mention is there made of the more important 
of the contemporary undertakings, namely the Musselburgh, the Glasgow, 
and Paul's Work companies. Another business, established at Hamilton, 
is also referred to. The relations between these different factories were 
partly harmonious, partly antagonistic. After the act of 1701, pro- 
hibiting the export of wool, joint action was taken by the Newmills and 
PauPs Work companies to convict persons evading this enactment 2. It 
appears, too, that improved technical processes were communicated by 
the Musselburgh to the Newmills company^. The chief occasion of 
friction arose out of the acts giving the owners of factories extensive 
powers over servants they brought into the country. The Newmills 
company several times complained of "the running away" of skilled 
hands to other cloth works, and the measures taken for the recovery 
of the fugitives are recorded*. 

Besides the works already mentioned, there were some others founded 
in the early years of the eighteenth century. One was owned by William 
Hog, of Harcarse, in Berwickshire, which had the unique distinction of 
surviving the Union ^ The methods of managing Gordon's mill, near 
Aberdeen, which was known as the manufactory of North-Mills, are of 
considerable interest. The proprietor, an advocate, named William 
Black, stated that his servants, who were highly trained, were bound 
to work for any one who would employ them, and work only for their 
master " when they have nothing else to do — yea, when any work comes 
from the country, his is laid aside." This was the only method by which 
Scots manufactures could be obtained at reasonable prices ! One is not 
surprised to find Black was not in any society, as he explains it, because 
the partners " would not so unanimously agree in running such hazards." 
In the study of Parliamentary petitions, one comes to expect that the 
amount demanded at the close will be in proportion to the benevolence 
in the preamble, and the present is a case in point. Black asked the 
privilege of a manufacture, and, in addition, parallel grants to those 

^ Acts of the Parliaments of Scotland , x. App. p. 56. 

2 Records of a Scottish Cloth Manufactory, p. 274. There is another reference to 
the Paul's Work as late as January 20th, 1703, when the master became security 
for a purchaser of cloth from the Newmills company. This entry is in the statistical 
matter, which is not included in the printed copy. 

3 Ibid., p. 238. * Ibid., pp. 225, 234, 264, 268. 

5 Collection of Petitions to the Barons of the Exchequer, ut *M/)m— Proposals 
of William Hog (dated January, 1709). 

S. C. III. 11 

162 Cloth Works of Blade and Lyell 1696 [div. ix. § 4 b 

enjoyed by the Newmills company, with the very important further 
requirement of Parliamentary sanction for the county raising any sum, 
not exceeding a week's cess, to be paid to Black for maintaining and 
teaching apprentices. Parliament granted one part of the petition, 
namely, the privilege of a manufacture : the immunities granted New- 
mills were refused to the North-Mills manufactory, and the Commissioners 
of Supply for Aberdeenshire were authorized to raise ^^1,000 yearly for 
five years to be paid Black for maintaining and teaching the trade to 
boys from the county^. 

James Lyell, of Gairdin, had obtained, in 1695, the privilege of a 
manufacture for a process for extracting oil from seeds, and for the 
preparation of hare and rabbit skins to be made into hats^. In 1704, 
he petitioned Parliament for the same encouragement for his woollen 
manufactory established at Gairdin, asking at the same time that 
he should be allowed ,£^1,000 Scots a year to enable him to teach the 
trade to poor boys. In support of his request, he stated that it 
was well known that "joint-stocks and co-partneries were seldom or 
never so sure, advantageous, and successful as the industry of private 
persons who have sufficient stock and skill for carrying on such an 
undertaking, and who, being encouraged to work for themselves, do not 
only improve in the work but in a short time bring low the prices and 
employ the poor^" Evidently, even in the first years of the eighteenth 
century, the effect of pauper labour on prices had been felt. 

C. The Scots Linen Manufacture (Incorporated by 
ACT OF Parliament, 1693). 

From a very early period rough linens had been made in Scotland. 
Before the Restoration the methods of weaving were rude, and there 
was no standard of quality or of the length of pieces. By an act 
entitled, "an act discharging the exportation of linen yarn,'' passed in 
the first Parliament of Charles II., yarn was to be sold by weight, 
bleaching by lime was forbidden, and all linens were to be of a certain sizeji 
according to their price. By the act of 1681 for encouraging trade and 
manufactures, the importation of foreign linens was prohibited. Up to 
1681 there had been a considerable trade in linen with the north of 

^ Acts of the Parliaments of Scotland, xi. pp. 81, 82. William Black was the 
author of The Privileges of the Royal Burrows, as contained in their particular Eights,,^ 
and the Ancient Laws and Records of Parliament and their General Conventions^ 
Edinburgh, 1707, and other tracts. 

^ Acts of the Parliaments of Scotland, ix. p. 420. 

3 Parliamentary Papers, 1704 — The Petition of James Lyell of Gairdin. 

Div. IX. § 4 c] The Linen Trade in Scotland 1680-91 163 

England — indeed, the home and foreign trade at this time was sufficient 
to employ about 12,000 persons in the spinning of flax. The English, 
being prevented from exporting both cloth and linen into Scotland, 
adopted retaliatory measures, and, as stated in a petition to the Privy 
Council in 1684, Scotsmen selling linens in England had been whipped 
as criminals and compelled to give security to discontinue the traffic. 
The Council recommended the Secretary of State to intercede with the 
King, in order that the Scots merchants might have liberty to sell their 
goods in England^ In 1686 it was ordained by act of Parliament that 
dead bodies should be buried only in Scots linen, and infraction of the 
law was visited with heavy penalties I This act was ratified in 1693 
and 1695. About this time a number of French refugees, who were 
expert linen weavers, arrived in Scotland and settled in Edinburgh, 
near the head of Leith Walk, which was long afterwards known as Little 

After the Revolution an attempt was made to introduce capital and 
improved methods by Nicholas Dupin, who had been instrumental in 
founding the King's and Queen's Linen corporations, both in England 
and Ireland. In the latter countries he had obtained patents granting 
the exclusive right of using certain new or foreign processes, and in 
each case the shares stood at considerable premiums for some time. It 
was unlikely that so astute an entrepreneur as Dupin, who could control 
considerable resources, would leave such a promising field as Scotland 
untouched; and accordingly, in 1691, he had secured the promise of a 
patent for Scotland, similar to those he had already obtained for England 
and Ireland. The matter came before the Convention of Royal Burghs 
in the following October, and evidently the proposed monopoly, as well 
as the introduction of English capital, excited no little dismay. The 
Convention summoned a special meeting to consider the grant, and in 
the meantime it entreated the King that nothing further be concluded 
in the matter 1 After the Committee had reported, the Convention 
declared that no more was necessary to improve the industry than to 
enforce the existing laws, because the reputation of the nation had 
suffered greatly abroad through the "irregularity and insufficiency of 
the linens exported ^'' Apparently no notice was taken of this suggestion, 
and in July, 1692, it was declared that the proposed company threatened 
to prejudice the state of the Royal Burghs, and that the adjustment of 

1 Acts of the Parliaments of Scotland, vii. pp. 465, 466; History of Civilization in 
Scotland, by John Macintosh, iii. p. 311. 

2 Acts of the Parliaments of Scotland, viii. p. 598. 

3 The Huguenots, by Samuel Smiles, London, 1867, p. 338. 

* Records of the Convention of the Royal Burghs, 1677-1711, p. 146. 
5 Ihid., p. 148. 


164 The Scots Linen Manufacture [div. ix. § 4 c 

the difficulty required the wisdom of Parliaments At the same time a 
direct appeal was made to the King, and it was urged that the proposed 
company would ruin the Royal Burghs I To this the King replied that 
he would not grant any patents or " erections " to the prejudice or 
monopolizing of the trade or manufactures of his ancient kingdom of 
Scotland ^ So far the Burghs had impeded Dupin's enterprize, and at 
first sight it would appear they had right completely on their side. It 
is to be remembered, however, that the monopoly Dupin's corporations 
had acquired in England and Ireland was not for the linen trade as a 
whole, but rather for certain kinds of fine spinning and damask- 
weaving^; and though there appears to be no copy of the proposed 
patent for Scotland in existence, in all probability the privileges would 
be the same. As these were new processes in that country, he had a 
right to a certain measure of protection, though the perpetual monopoly 
of the specified processes erred on the side of generosity to the in- 
ventor. The real reason of the opposition of the Burghs was the long- 
standing difficulty, which had descended from the gild-merchant, in 
reference to trading relations between free men and those not free of a 
Royal Burgh. This occasioned much trouble to the Newmills woollen 
manufactory, and was probably the reason of the peculiar manner in 
which its output was distributed ^ 

Dupin had not waited for the signing of his patent, but had already 
acquired an interest in suitable works. It would appear that the looms 
were established in a tenement known as PauFs Work at the foot of 
the Leith Wynd in Edinburgh. As early as 1609 there had been an 
attempt to establish a cloth factory at the same place ^, and in 1681 
the works were again started, and the privilege of a manufacture granted 
the proprietors for the linen and woollen industry''. Other works had 
also been acquired at the citadel of Leith, and by 1693 about 700 
persons were employed, and, according to the account of the owners, 
the linens produced far exceeded in quality those made in England or 

Up to 1693 the undertaking had been financed by the English 

^ Records of the Convention of the Royal Burghs, 1677-1711^ p. 164. 
2 Ibid., p. 165. 

^ Ibid., p. 168: cf. State Papers^ Domestic^ Warrant Book — Scotland, xv. p. 125. 

^ Vide supra, pp. 91, 99. 

^ A Representation of the Advantages... of erecting Manufactories, ut supra, also 

supra, p. 142. 

6 The Linen Trade, by Alex. J. Warden, London, 1854, p. 428. 

7 Acts of the Privy Council, 1682-5 (under September 1, 1681)^ Chambers, 
Domestic Annals of Scotland, ii. p. 427. 

s Parliamentary Papers, 1693 —Memorandum anent the advancement of linenj 
cloth, etc. 

Div. IX. § 4 c] Scheme for Extension of the Works 1693 165 

corporation, and the latter had now troubles of its own to face and 
was unable to provide the capital needed. The pioneer company in 
Scotland, without the protection of a patent or any other privileges, 
could no longer pay its way ; and in a "memorandum anent the advance- 
ment of linen cloth, being considerations on the profits that would arise 
from the advancement of linen cloth, with a list of the acts and 
privileges that would cause this Kingdom to flourish by that trade 
alone," it is shown that, on the winding up of the company, the finer 
work it had now begun to produce would be transplanted to Ireland ^ 
Whereas, if more capital were introduced and " with good wholesome 
laws," for the encouragement of the shareholders, " the linens produced 
would be cheaper than our neighbour nations to our advancement and 
their discouragements" Probably Dupin had at one time intended the 
English corporation to be the parent undertaking for the three kingdoms, 
but already it was on the verge of failure — the shares having fallen 
from 45 to 18 during this same year 1693S It may have occurred to 
him, considering the natural advantages of Scotland for this industry, to 
make the PauFs Work the chief factory in Britain. However this may 
be, he suggested the formation of a new company on a very large scale, 
with a capital of from .^£'20,000 to ^£^40,000 sterling, which should be 
specially exempted from attachment from certain outstanding debts 
already incurred*. Apparently the existing company was a direct 
successor of the partnership of 1681, for it is also asked that the 
period for freedom from taxes (which in that case would expire in 
1700) should be prolongedS The places where food was supplied to the 
work-people should be free of taxes also ; and, as in the case of the New- 
mills company, any drink consumed by them from excise duties S The 
laws regulating the quantity of linens should be enforced, and finally 
the company asked to have a royalty of 2J. Scots on every ell of linen 
sold in Scotland to maintain servants to measure, mark and seal it, and 
" to give good example and instruction in every shire about the goodness 
of if," whence it seems to follow that the competitors of the company 
were to be taxed to advertize the product of their rivals ! 

On the recommendation of the Committee of Trade, Parliament 
decided to encourage the company, and no less than three acts were 
passed in June 1693 in its favour. With special reference to the 
industry as a whole, all linens were to be of uniform size and quality, 
and, as a guarantee of this provision being carried out, all pieces ex- 
posed for sale must bear the seal of a Royal Burgh — the fee for sealing 

1 Parliamentary Papers, 1693— Memorandum, ut supra, f. 7. 

2 Ihid., f. 2. 3 Yide supra, p. 97. 

* Parliamentary Papers, 1693— Memorandum, ut supra, ff. 5, 6. 
fi Ibid., f. 7. « Ibid., f. 4. 7 Ibid., f. 8. 

166 The Scots Linen Manufacture [div. ix. § 4o 

being 8^. Scots per piece. Iii future, no yarn was to be exported, and 
it must always be sold by weights By another act, the company 
obtained the following privileges: it had the right (confined by the 
previous act to the Royal Burghs) of affixing a seal to linens from its 
looms, duties on its exports were remitted for twenty-one years, and all 
drink consumed by the work-people was free of taxes. All the privileges 
of the act of 1681 for encouraging trade and manufactures were also 
granted. It was also enacted that the undertaking could not be wound 
up without the consent of three-fourths of the shareholders, and that a 
transfer in the books of the company was sufficient evidence of the 
ownership of shares^. About the time this act was obtained, the shares 
began to be dealt with in London, but no record of the prices realized 
has been preserved^. 

Dupin, in his "memorandum'' to the Committee of Trade, had 
mentioned a capital of between ^20,000 and ^£^40,000 sterling as being 
required. This was a much larger amount than that invested in the 
Irish or English corporations, the initial capital of the former having 
been ^2,000, and that of the latter £S,mO\ No doubt the great 
premium, which was obtainable at one time on the shares of both under- 
takings, as well as the eagerness of the public to take up a second 
issue of the English body at <^50 for the d^lO share, suggested the idea 
of floating the Scottish company with a relatively larger capital. But 
in view of the very meagre amount of the resources of Scotland available 
for investment, as shown by the difficulty Dupin found in obtaining even 
a part of the ^4,000 required for the Scots Paper manufacture, as well 
as the embarrassment of the English Linen corporation at this time, it 
was only to be expected that very little of the total amount required 
was subscribed. The issue of stock, however, was not a total failure, 
for it is recorded that Sir John Foulis of Ravelston and members of 
his family owned shares^, still there are reasons to believe that only a 
small sum was provided, and the whole enterprize was, therefore, in 

^ Acts of the Parliaments of Scotland, ix. pp. 311, 312. 

2 Ihid., IX. p. 316. 

3 Houghton, Collections, under May 16th, 1694. In this list {vide Plate, vol. i.) 
the linen undertakings are printed as follows : — 

Linen K. and Q.'s £9 
The price of shares in the latter is not recorded though Houghton offered that in 
such cases any subscriber, who paid an extra subscription to his paper, could have 
the prices filled in by hand. No numbers of the Collections, with these additions, 
have been discovered. 

* Vide supra, pp. 91, 100. 

^ The Account Book of Sir John Foulis of Ravelston, edited by Rev. A. W. C. 
Hallen (Scottish History Society), pp. 183, 222, 223. 

Div. IX. § 4c] Shares offered to Royal Burghs 1694 167 

danger of never obtaining a fair start; but, immediately it became 
apparent that sufficient subscriptions would not be obtained, Dupin re- 
opened negotiations with the Royal Burghs for financial assistance. On 
the analogy of the constitution of the Dutch East India company, he 
represented that a part of the capital required should be invested by the 
Royal Burghs, a course which was rendered legal by the precedents for 
municipal trading dating back to the time of Charles I. An agreement 
was signed by the Royal Burghs on May 28th, 1694, which provided 
that the capital of the company should be fixed at ^30,000 sterling, 
divided into 6,000 shares of £5 each. On the lines of the Fishery 
company established in the reign of Charles I., it was provided that half 
the shares should be offisred for subscription in England, and that the 
management should be divided between the subscribers of the two 
countries equally \ The board was to consist of 30 assistants, from whom 
the governor, deputy -governor, and treasurer were to be chosen^. The 
voting rights were limited to one vote for every five shares, with the 
proviso that no holding of shares entitled the owner to more than five 
votes, or, in other words, any investment beyond £19.5 sterling had no 
vote^ Shareholders were entitled to a separate certificate for each 
share*. As in the White Paper manufacture, Dupin was to receive 8*. 
per share, or 12 J per cent., for his eiForts prior to the incorporation of 
the company ^ 

The Royal Burghs, as a whole, had not come forward to subscribe, 
and in July few were interested in the company. The Convention, 
after deliberation, recommended any burgh, interested in the linen 
industry, to join Dupin's society^, so that it may be concluded that 
only a small part of the total capital proposed was actually paid up. 
Still, the increase to the resources of the undertaking was sufficient to 
secure its financial stability for the time, and, in addition, to enable it 
to acquire additional properties. In 1695 mention is made of works at 
Logan's Close, in Leith, and of a bleaching ground at Corstorphinel 
In the same year the Committee of Trade recommended Parliament to 
encourage the company, and permission was given to bring in such an 
act as would be beneficiaP. Accordingly the company framed an over- 

1 Articles of Agreement made and agreed on this twenty-eighth day of May, in the 
year of our Lord 1694, between the Royal Free Burrows ...of Scotland, who shall be 
pleased to subscribe and be concerned in the Scots Linen Subscription Book for the Linen 
Manufacture in that Kingdom on the one part, and Nicholas Dupin... in trust for the 
members who shall be pleased to subscribe and be concerned in the aforesaid manufacture 
in England, of the other part. Edinburgh, 1694, pp. 1, 2 ; vide supra, ii. p. 363. 

2 Ibid., p. 5. 3 ihid,^ p. 13. 4 Ibid., p. 11. ^ Ibid., p. 12. 
6 Records oj the Convention of Royal Burghs, 1677-1711, p. 194. 

'' Acts of the Parliaments of Scotland, ix. p. 430. 

5 Parliamentary Papers, circa 1695— List of Acts to be desired. 

168 The Scots Linen Manufacture [div. ix. § 4c 

ture for an act, which was passed in due course by Parliament, giving ™ 
the right (ah-eady granted by the Privy Council to the Newmills 
company) of searching for and seizing linens not in conformity with the 
act of 1693. The same measure extended the exemptions from excise to 
the properties recently acquired by the company \ 

In spite of the right of seizure of imperfect linens granted by the 
acts of 1693 and 1695, in 1698 the company complained to Parliament 
that the true making of linen was not observed, and for this reason 
Scottish linens were in disrepute abroad I By 1700 the acts for regu- 
lating the quality of linens had ceased to be obeyed, and an overture 
for a fresh enactment confirming previous legislation was introduced, but 
it did not become law^. Opinions, expressed by apparently disinterested 
persons on the quality of linen made in Scotland, were far from being 
harmonious. A writer, comparing the state of manufactures at the 
beginning of the eighteenth century with the same industries at an 
earlier date, says that " all sorts of linens are now made finer, broader, 
and in larger pieces*," and another describes the flax industry in 
general terms as having arrived "at a very good degree of perfection ^^ 
There is, however, reason to believe these statements were too optimistic. 
In 1704 it is noted that Scotsmen had found their linens " such a drug 
on their hands that not a third part is sold of what was formerly, 
and even that at so low a rate that what was before sold for 12<i. is now 
sold at near a half under^.*" It was said in 1706, that, if Scottish linens 
were rightly made, three times as much could be sold abroad^. Indeed, 
there is an accumulation of evidence that fine linens were not produced 
to any considerable extent in Scotland till after the Union. Not only 
so, but owing to the continued export of defective, and it is to be feared 
dishonestly described linens, there was a prejudice in foreign markets 
against Scottish manufactures ^ These circumstances constituted a 
serious handicap to the Scots Linen manufacture, for it could not 
produce on a sufficiently large scale if it could not find a market abroad, 
and it could not sell readily either abroad or in England, owing to 

^ Acts of the Parliaments of Scotland, ix. p. 430. 

2 lUd., X. App. p. 22. 

2 Parliamentary Papers^ 1700 — Overture for an Act of Parliament for Measuring 
and Sealing- of Linen and Woollen Cloth. 

* MS. Discourses anent the improvements may be made in Scotland (Advocates' 
Library, Wodrow MSS., 33. 5. 16), f. 15. 

^ A Letter to a Member of Parliament. Edinburgh, 1704, p. 9. 

*^ An Essay on Industry and Trade. Edinburgh, 1706, p. 10. 

'' Scotland's Interest : Or the Great Benefit and Necessity of a Communication of 
Trade with England, 1704, p. 5. 

8 Similarly the Newmills company was unable, in 1701, to sell cloth it had 
exported to Holland. 

Div. IX. § 4c] Difficulties of the Linen Trade 1700-4 169 

the prejudice against Scottish hnen. It was therefore to be expected 
that the company could not continue to pay its way ; and it would appear 
that, during the first few years of the eighteenth century, the under- 
taking was wound up and the buildings let. An advertisement which 
appeared in the Edinburgh Courant in August 1708 sets out that the 
undertakers of the woollen manufactory at Paul's Work, at the foot of 
Leith Wynd, with the several houses there and at Bonnington Mills, are 
prepared to let these premises, together with " the money that is paid 
.yearly by the good town of Edinburgh for the maintenance and teaching 
of poor boys." This seems to apply to a woollen factory^ which was 
situated near the property of this company. As late as 1713 an under- 
taking, described as that at PauFs Work, was in a flourishing financial 
condition as is shown by its being able to lend the City of Edinburgh 
£9.^^QQQ. 13^. M. Scots at 5J per cent. This was the third largest loan 
out of thirty-six, being exceeded only by those of the " College " and 
the " Lords of Session-." On the whole it is probable that this was a 
woollen manufactory, dealing with the coarser fabrics. Ten years before 
this date the linen trade had suffered during the tension between 
Scotland and England. The exportation of Scottish linens to England 
was prohibited, together with that of a number of other commodities, 
and it was estimated that the total annual loss, occasioned by this legis- 
lation, was .^'l 20,000. In the course of a spirited protest, in which 
retaliation was recommended, it was stated in 1705 that the chief seats 
of the linen industry were then at Hamilton and Glasgow, so that 
it may be inferred that, by this date, the Scots Linen manufacture 
had been wound up^. 

D. The Silk Manufactory (1697). 

As early as 1682, an effort had been made to introduce the spinning 
of silk into Scotland. In that year, a monopoly for seventeen years was 
granted to George Sanders for a manufactory for the twisting and 
throwing of all sorts of raw silk. Sanders having failed to succeed in 
his undertaking, the Privy Council, on June 15th, 1697, authorized 
Joseph Ormiston and William Elliot to set up a similar undertaking, 
which was to have the privilege of a manufacture under the act of 

^ Vide supra, p. 159. 

2 " MS. List of the Town of Edinburgh's Creditors at Lambas, 1713 "—bound 
up in "Edinburgh Tracts/' Univ. Lib. St Andrews, i. (1671-1799— CG. 3. 49). 

3 The Accompt Current between Scotland and England, by J[ohn] S[puell], Edin- 
burgh, 1706, pp. 1, 20. 

170 The Silk Manufactory 1697-1701 [div. ix. 


1681 \ In the year 1698, the promoters presented a petition to Parlia- 
ment in which they stated that the enterprize had not as yet been 
started, " because it is very obvious that except others had been disH 
charged and debarred from setting up and prosecuting the same manu- 
facture for a certain space of years, during which we might have 
expected a reimbursement of our charges and expenses that usually 
attend such an undertaking, your petitioners could not follow the said 
act [of the Privy Council] without evidently hazarding the loss of our 
stock, beside the disappointment of any small gain that might reason- 
ably be expected by the undertakers of any such public work."" It was 
added that though the Privy Council had granted the privilege of the 
undertaking being a manufacture, it had been loth to give a monopoly, 
that being more proper for Parliament. The signatories, therefore, 
asked the sole privilege of a manufacture for winding, throwing, twist- 
ing, and dyeing all sorts of raw and unwrought silks for themselves 
and the partners they intended to assume^. This petition was considered 
by Parliament, but the partnership was subjected to a peculiar species 
of opposition. The tendency of the act of 1681 was not only to 
encourage trade and manufactures but also to repress luxury by the 
prohibition of the wearing of certain costly materials. These pro- 
visions, like other clauses of the act, had ceased to be observed, and in 
all probability they would have been forgotten had it not been that the 
country was beginning to experience a scarcity of resources, which was 
partly due to bad harvests and the payment of the capital subscribed 
to the Darien company, partly also, but in a less degree, to investments 
in new manufacturing enterprizes which as yet had yielded small 
returns. Owing to the trend of opinion at the time, the want of 
spending power was attributed to the growth of luxury, and there was 
a marked tendency to revert to the enactment of sumptuary laws. 
Accordingly, in 1698, an "act to regulate the wearing of silk stuffs" 
was introduced, but it was ordered to lie on the table ^. 

Though Ormiston and his partners had failed to secure a monopoly, 
and though their projected enterprize was threatened by sumptuary 
legislation, the scheme was proceeded with, and at the same time efforts 
were made to secure other privileges. In 1700, an act was brought 
before Parliament to prohibit the importation of foreign silk stuffs ; 
and, after some exceptions had been made, it was passed in 1701*. 

^ Acts of the Privy Council of Scotland. Chambers, Domestic Annals of Scot- 
land, III. p. 155. 

2 Parliamentary Papers, 1698 — The Petition of Joseph Ormiston and William 
Elliot, Merchants, anent a Silk Manufactory. 

3 Acts of the Parliaments of Scotland, x. p. 144. 

4 Ibid., X. pp. 146, 147, 240, 280. 

Div. IX. § 4 d] The Silk Manufactory 1701-4 171 

With this encouragement, the undertaking made progress, and, about 
this time, 23 looms were in use^ By this period, profits had been 
earned sufficient to excite the envy of those who were not members of 
the company, and complaints were made that the benefits of the trade 
were confined to a small number of persons^ Another objection to the 
company was urged by the merchants of Edinburgh, who complained 
that the silk manufacture was injurious to the cloth trade. The former 
industry depended of necessity on imported raw material, whereas the 
latter utilized a home product, therefore the woollen trade should be 
encouraged and the silk-weaving industry suppressed ^ 

A much more serious menace to the continued prosperity of the under- 
taking than the opposition of the cloth manufacturers arose from the 
neglect of the act of 1701, prohibiting the importation of foreign silk, 
and to the facilities for smuggling goods that could be packed in small 
bulk^. As in the case of the Royal Lustring company of England, it 
was found that it was almost impossible to maintain prices owing to the 
supply of smuggled goods being of considerable magnitude ^ Besides, 
the passing of laws to encourage certain companies or individuals, by 
the prohibition of competing imports, threw the onus of discovery and 
prosecution on the favoured companies, and this resulted in the prose- 
cutors sustaining " much reproach and discouragement^." In addition, 
the scarcity of capital began to be more felt in the first years of the 
eighteenth century, and persons who did not find a remedy in land-bank 
schemes, or the revival of the Darien company, continued to press for a 
sumptuary law. One writer in favour of such legislation says, " who 
can deny that every heritor in Scotland doth spend more on superfluities 
for himself, his wife, and children, than his taxes for the public amount 

1 Parliamentary Papers, 1702— Memorial concerning the State of Manufactures 
before and since the year 1700. 

2 Parliamentary Papers after 1702— Answers to Memorial given in by the 
Merchant Tailors. 

3 Acts of the Parliaments of Scotland, xi. p. 132. The statement in the text 
must be taken as an ex parte one. Even as late as 1774 it is recorded that little of 
the wool then used was the product of the country, most of it being brought from 
Newcastle and London (Postlethwayt, Dictionary of Trade and Commerce, Article 
on Scotland). The minutes of the Newmills company show that, when Scottish 
wool was used at all, it could only be made into the lowest grade of cloth, while 
an analysis of the names of sellers to the company suggests that the purchases may 
have been dictated by other than strictly commercial objects. At the same time 
very large purchases of Spanish wool were made. 

* Acts of the Parliaments of Scotland, xi. pp. 53, 54. 
^ Vide supra, pp. 80-3. 

6 ParHamentary Papers after 1702— Answers to Memorial given in by Merchant 

^ a 

172 The Silk Manufactory 1704-9 [div. ix. § 

to, and much more — is not this prohibition an easy and virtuous way ta 
reimburse ourselves^?" The silk manufacturers were charged with 
encouraging prodigaHty, and much was made of the fact that this was 
one of the very few manufactures encouraged by Parliament which 
produced articles of luxury. It was also objected that the industry 
employed very few hands. This was said to be a " mistake, for it is 
well known that there are a great many young gentlemen, who formerly 
were in great straits, who are now subsisting by winding silk " — indeed, 
the proprietors of the manufactory contended that they employed as 
many persons, proportionately to the size of the country, as were paid 
wages in the same industry in England. The merchants who retailed 
silk memorialized Parliament showing the injury they had sustained by 
the partners in the manufactory themselves acting as retailers (as had 
been done by the Newmills company), which was looked upon as " an 
attempt to drive a plain monopoly I" When it is remembered that the 
founders of the company endeavoured to obtain a monopoly, it is 
amusing to find they profess to be surprised at this charge being made, 
and point to the fact that anyone may start a manufactory. In 1705, 
an overture for an act, prohibiting the wearing of any silk (except black 
silk), was brought before Parliaments The proprietors of the silk 
manufactory petitioned against this overture becoming law. They 
stated that the industry had been brought to an extraordinary degree 
of perfection^; but, as against this, it was alleged that the web was 
imported into Scotland already warped S The manufacturers further 
pleaded for consideration from Parliament in view of the fact that, 
through the establishment of the industry, "very many poor were 
profitably and virtuously employed," and that they could sell silks 
as cheaply as those imported from England S The Union gave them 
an opportunity of testing the latter assertion, apparently to the 

1 Parliamentary Papers, 1700— Reasons General for a Sumptuary Law. About 
this time or not long afterwards there is mention of a counter agitation to remedy 
the adverse exchange "by the import of superfluities of many kinds" — A Proposition 

for Remeding the Debasement of Coyne in Scotland St Andrews Univ. Lib. Pamphlets 

2 Parliamentary Papers, 1704 — Answers of the Masters of the Silk Manufactory 
to the Representations of the Retailing Merchants. 

3 Acts of the Parliaments of Scotland, xi. p. 219. Parliamentary Papers, 1705— 
Draft Act— Silk. 

* Parliamentary Papers, 1705— Petition of the Merchants and Others concerned 
in the Silk Manufactory. 

5 Acts of the Parliaments of Scotland, xi. p. 54. 
« Parliamentary Papers, 1705— Petition, ut supo-a. 

Div. IX. § 4e] Baize and Stocking Companies 1693 173 

detriment of the Scottish silk industry, for, in 1709, we find Joseph 
Ormiston giving his attention to the cloth trade, and coming forward, 
as a petitioner on behalf of a proposed company, for a part of the 
grant payable by the Commissioners of the Equivalents 

E. Other Textile and Allied Industries. 

The Manufacture of Colchester Baizes (1693). 

The Manufacture of Stockings (1700). 

The Sail-Cloth Manufactory at Leith (1694). 

Rope Work of James and Thomas Deans (about 1690). 

The Rope Manufactory at Glasgow (1690). 

Cordage Manufactory at Glasgow (1700). 

John Holland, the founder of the Bank of Scotland, was one of the 
many persons with capital at their disposal who, after the Revolution, 
were endeavouring to develope Scottish industries. He was instrumental 
in forming a company for producing "that sort of cloth, commonly 
known as Colchester baises, which will consume a great deal of cloth, 
which cannot be profitable either at home or abroad." By an act of 
Parliament, dated June 14th, 1693, a company was created, consisting, 
in the first instance, of six persons named, to which the usual statutory 
privileges of a manufacture were granted. Further, as in the case of 
the Scots Linen manufacture and other companies, an entry in the 
books to be kept in Edinburgh and London, was sufficient title to the 
ownership of shares. This act gives the curious privilege of a 
monopoly for seven years as against other joint-stock companies, but 
not against private persons, subject to the condition that works 
should be established within two years, otherwise the grant was to 

As early as 1682, the Newmills company had introduced the making 
of stockings by the use of weaving-frames, but the plant was sold in 
1689^ In 1700, a number of merchants in Edinburgh petitioned for 
encouragement in this industry ^ and in 1706, there were two firms 
engaged in the traded 

^ Collection of Petitions to the Barons of the Exchequer, vi supra — Petition of 
Joseph Ormiston. 

2 Acts of the Parliaments of Scotland, ix. p. 313. 
^ Vide supra, pp. 143, 149. 
* Acts of the Parliaments of Scotland, ix. p. 231. 
° Edinburgh Courant, No. 189. 

174 Sail-Cloth and Rope Companies 1690-4 [div. ix. § 4 e 

Up till the time of William III., Scottish shipping was under a* 
grave disadvantage in that it was necessary to build vessels of any 
considerable size out of the country, and, once a ship had been ob- 
tained, stores, such as sail-cloth and cordage, had to be imported. 
Attempts were now made to remedy this state of affairs by the 
formation of a company for the manufacture of sail-cloth. In 1694, 
a patent was granted certain undertakers incorporating them as a 
'' societas,^'' with a monopoly for seven years \ By an act of Parlia- 
ment of the year 1696, the monopoly was extended to nineteen years-. 
A factory had been built at Leith, which was burnt down in 1710. 
As the monopoly was due to lapse (unless renewed) in 1713, the pro- 
prietors gave up the trade, and the premises were rebuilt as the Great 
Brewery, in the Yard Heads ^ 

For the provision of home-made ropes, a rope-work had been started 
at Newhaven, by James Deans, who had retired from business after 
incurring considerable loss. In 1694, his son, Thomas Deans, received 
the privileges of a manufacture from the Privy Council, " being 
prepared to venture another stock in the same work^.'^ In the 
Newmills minutes, there is considerable information as to the members 
of the Deans family. By 1703, Thomas Deans was deceased, and his 
will was produced by his executor in connection with a holding of stock 
in the Newmills company, which amounted to ^6^9,000 Scots, or £1B0 
sterling ''. 

In 1690, a rope-manufacturing company had been established at 
Glasgow, with a capital of ,^40,000 Scots, or rather over .^3,000 
sterling^, to which, on May 7th, 1696, the Privy Council granted the 
privileges of a manufactured Two years later, this company petitioned 
Parliament for a prohibition of imported cordage from the Sound or 
the East Seas. It was pointed out, in reply, that the whole kingdom 
could not be supplied conveniently from Glasgow, " because of the 
dangerous passage by sea," and that it was easier for ship-owners in 
the North of Scotland to obtain cordage from Holland than from 
Glasgow, till the time came when ropes could be manufactured in 
their own districts^. Accordingly, a duty of 60s. per cwt. was im- 

1 Reg. Magni Sig. (General Register House, Edinburgh), xiv. (1692-1700), f. 76. 

2 Acts of the Parliaments of Scotland, ix. p. 103. 

3 The Scots Postman, No. 854, Feb. 28, 1711. 

* Acts of the Privy Council quoted by Chambers, Domestic Annals of Scotland, 
III. p. 78. 

^ Records of a Scottish Cloth Manufactory, pp. 336, 337- 

^ Gibson, History of Glasgow, ut supra, p. 245. 

"^ Chambers, Domestic Annals of Scotland, iii. p. 87. 

8 Parliamentary Papers, 1698 — Overture anent Ropes and Cordage. 

Div. IX. § 4e] Cordage Manufactory 1700 175 

posed on imported cordage to encourage the Glasgow company ^ By 
the time M'Ure wrote his View of Glasgow, this undertaking was 
already known as the " old rope work," and, in 1777, it was still in 

In 1700, a petition was addressed to Parliament for encouragement 
to establish a cordage manufactory at Glasgow ^ There is no evidence 
to show whether this or the former company, or again a later under- 
taking, is that of which M'Ure gives the following description : " The 
Rope Work is situated on the west side of Stockwell Street, consisting 
of two stately lodgings, belonging to the proprietors, — great store 
houses — spinning houses, — garden, and boiling-houses ; and the old 
green for spinning large cables, tarred and white ropes, with a pleasant 
garden ^^ 

^ Acts of the Parliaments of Scotland, x. p. 154. 
2 Gibson, History of Glasgow, ut supra, p. 245. 
^ Acts of the Parliaments of Scotland, ix. p. 231. 
* Glasghu Fades, p. 584. 


One of the industries, established as a result of the legislation of 
1661, was a wool-card manufactory at Leith. Up to this time the 
instruments, used in carding wool, had been imported ; and, following 
the example of England, it was decided to protect the persons who 
would start the production of wool-cards in Scotland. As early as 
1565 patents had been granted in England which formed the basis of 
the important company known as the " society of Mineral and Battery 
Works ^^ From the date of its foundation up to 1662 several proclama- 
tions had been issued making it illegal to import foreign wool-cards or 
to sell " translated" or trimmed-up old wool-cards. Owing to the trend of 
events in Scotland it was not till 1663 that a similar organization was 
established there. The Scottish act of 1661, while granting large 
privileges to infant industries, was quite silent as to the protecting of 
them from foreign competition. In this case the keen desire to rival 
the English wool trade led to all possible encouragement being given to 
a Scottish wool-card manufactory, not only, under the prevailing 
mercantilist ideas, to prevent the exportation of bullion, but also to 
improve the carding of wool by insuring the use of new wool-cards 
only — it having been customary for the people to buy cards which had 
been rejected elsewhere and re-made 2. Accordingly, on June 3rd, 1663, 
a patent under the Great Seal was granted to James Currie, Provost 
of Edinburgh, and James Auchterlony, their assigns and partners 
(sociis), conferring the monopoly of producing wool-cards for nineteen 
years ^ This privilege was confirmed to the same persons and two 
others by an act of Parliament dated September 29th of the same year. 
The importation of re-furbished cards is forbidden under the usual 
penalties. Prohibitive duties were exacted from persons importing 
foreign cards, namely, £6 Scots per doz. " stock-cards," and £S Scots 
per doz. of other [new] cards. These duties were to continue for seven 

1 Vide supra, 11. pp. 413-15. 

2 Parliamentary Papers,, 1690 — Act anent the Manufecture of Cairds. 

3 Reg. Magni Sig., x. (1676-84), f. 142. 

Div. IX. § 5] Leith Wool-Card Manufactory 1663-89 177 

years from the starting of the manufactory. For the next ten years the 
tax was to be reduced by one-half, and subsequently imports were to 
be free, unless the Lords of the Exchequer saw reason to continue the 
imposts. These privileges were subject to the following conditions: 
the company must produce a sufficient quantity of cards to supply 
the whole country, the price charged for the first seven years must 
not be more than ten per cent, in excess of that of those imported before 
the payment of import duty, and after seven years the ten per cent, 
allowance was to ceased 

During the early years of the history of this co-partnership the 
importation of re-furbished cards continued; and, for further en- 
couragement of the undertaking, the original duties were maintained, 
and .the conditions imposed on the company interpreted generously. On 
June 11th, 1675, the Lords of the Exchequer endeavoured to prevent 
the importation of new and re-furbished cards by the connivance of the 
farmers of the customs, and it was ordered that all foreign cards should 
be seized and destroyed ^ This course, as well as the endeavour of the 
managers to enforce their monopoly by the prevention of the sale of 
cards, except those made by them, led to considerable dissatisfaction. 
In 1680 there were complaints from Dundee brought before the Con- 
vention of Royal Burghs^, and it is not improbable that in view of the 
determination of the monopoly in 1682 the patentees were inclined to 
moderate their demands for the time. 

The financial results of the venture had so far been disastrous. The 
capital raised had been thrice lost — according to the tale of the company 
— solely owing to the continued importation of re-furbished cards. On 
these grounds a renewal of the monopoly, as well as more stringent 
prohibition of imported cards, was applied for^ On February 8th, 1681, 
an extension of the monopoly was granted for a further period of 
nineteen years'^, and on July 15th the Lords of the Exchequer repeated their 
previous order to the tacksmen of the customs to enforce the law against 
imported wool-cards. By an act of the Privy Council of December 6th, 
1689, the same prohibition, especially as affecting re-furbished cards, was 
again repeated^. 

These privileges resulted in several real or alleged grievances. Like 
the Newmills woollen company, the Leith Card manufactory had the 

^ Acts of the Parliaments of Scotland, vii. p. 488. 

2 Parliamentary Papers^ 1690— Information of the heirs of John Hay... and 
Managers of the Caird Manufactory at Leith. 

3 The Records of the Convention of Royal Burghs , 1677-1711, p. 21. 
* Parliamentary Papers, 1690— Information, &c., ut supra. 

^ Reg. Magni Sig., x. f. 142. 

6 Parliamentary Papers, 1690 — Information, &c., ut supra. 

S. C. III. 12 

178 Leith Wool-Card Manufactory 1685-6 [div. ix. § 5 

right of compelling suspected persons to testify on oath, and in 1685 
the managers forced traders to make the necessary declaration before 
the supreme judicatory. This was felt to be a hardship, and a petition 
was presented to Parliament praying that the oath might be taken in 
the burgh where the person making it resided ^ As a result of a seizure 
arising out of the act of the Privy Council of 1689, the company and the 
Royal Burghs came into conflict. John Spruell had imported cards, and 
when these were destroyed, he determined " to raise the Royal Burghs 
to break the manufacture ^'■' A draft act was prepared which, after 
reciting the terms of the two patents, set forth that none or very few of 
the conditions of the first patent had been performed of set purpose so 
that the monopoly might be extended ; for this reason it was proposed 
to be enacted that the patent should be null and void, and that wool 
cards might be imported as formerly ^ The supporters of Spruell alleged 
that the cards made at Leith were neither good nor cheap. These 
charges educed a considerable amount of evidence from the manu- 
facturers. It was stated a stock of cards, valued at <^1,000 sterling, 
was held at Leith, and that none could deny their cheapness " except 
such as buy them as a cloak under which they sell great quantities of 
old re-furbished cards every year which, when search is made for the old 
ones, are always produced and kept unsold for that eff*ect.'' The re- 
made cards are declared to be " a perfect cheat and have beene the ruin 
of the manufactured" The fraud consisted in the fact that the re- 
furbished cards could be bought in England at Ss. a doz., and were sold 
in Scotland at the same price as new ones. The latter fetched from 
18^. to 20^. a doz. in London, and the Leith undertaking offered cards 
made there for 20^. a doz., with six months' credit, thus conforming to 
the provisions of the act of 1663. The quality of the Leith cards was 
guaranteed by the fact that they were in use at the Newmills and other 
manufactories, and the masters of these works had testified that the ■ 
cards were as good as any they could obtain from England or abroad'. 
In so far as this statement relates to the Newmills woollen manufactory 
some qualification is required, for in this case the cards required for the 
best work were imported; for instance, on June 2nd, 1686, 4 doz. Spanish 
wool-cards were ordered from Holland^. The Leith company also 

1 Reports of the Convention of Royal Burghs, 1677-1711, p. 59. 

2 Parliamentary Papers, 1690 — Information, &c._, ut supra. 

3 IMd.j 1690 — [Draft] Act anent the Manufacture of Cairds. 
* Ibid., 1690 — Information, &c., ut supra. 

^ Ibid., 1690 — Information for the Partners of the Manufactory at Leith for 
making Wool and Tow Cards. 

^ Records of a Scottish Cloth Manufact^yry , p. 123. 

Div. IX. § 5] Leith Wool-Card Manufactory 1686-1705 179 

claimed that it could undersell any cards, either made in Scotland or 
imported from abroad, and that exports could be made at a profit. 
The tacksmen of the customs were said never to have exacted half the 
duties on new cards and to have admitted re-furbished ones, while it was 
added that large outlays of capital had been made " on the public faith 
of the laws," so that any interruption of the monopoly would be a great 
hardship before this outlay had been recovered. It required ^500 
sterling to provide calf-skins, and £^00 sterling to pay the wrights 
who prepared timber for making the cards, besides many other expenses. 
In all sixty families had been maintained, and these were in danger of 
being reduced to beggary, if the importation of cards were permitted. 
On these grounds the company asked that the privilege of a manu- 
factory should be granted to it for a further period of nineteen years, and 
that all foreign cards should be prohibited for all time coming \ The up- 
shot of the opposing petitions was that the draft act against the company 
was referred to the Commissioners of Fines and Forfeitures, and nothing 
was done 2. 

Though the Royal Burghs had suffered a check in the agitation 
against the company in 1690, they were far from allowing the matter to 
rest. In 1691 the agent of the burghs was directed to endeavour to 
obtain a suspension of the privileges of the manufactory, and in the 
following year he was ordered to defend any burgess, inhabiting a Royal 
Burgh, who was charged at the instance of Ewan MacGrigor, one of the 
managers of the co-partnery. In 1696 a Committee was appointed to 
hear complaints against the monopoly, and, on the Committee having 
reported, the Convention recommended the Commissioners to Parlia- 
ment "to discharge the great grievance of the manufacture of wool- 
cards^." No result followed from these representations. The other 
side had not been idle, and a decree was obtained which compelled 
persons requiring wool-cards to buy those made at the Leith manu- 

This decree evoked an indignant protest from the Royal Burghs in 
1703, which declared that the cards made at Leith were " insufficient," 
and that there was " one universal complaint against them^" In 1705 
a memorial against the company was transmitted to Parliament. It 
alleged that there were hundreds of complaints from persons, even from 
whole parishes, which had been distressed by the masters of the manu- 

1 Parliamentary Papers, 1690— Petition of John Hay and others, and Information 
for the Partners, &c. 

2 Ibid., 1690— [Draft] Act anent the Manufacture of Cairds. 

3 Records of the Convention of Royal Burghs, 1677-1711, pp. 141, 155, 210, 229, 

4 Ibid., p. 346. 


180 Leith Wool-Card Manufactory 1705-7 [div. ix. § 5 

factory. To this the company repHed that all prosecutions had been 
directed against the unlawful importation of "that rotten stuff of 
foreign old cards," which, " though in a manner cast away abroad and 
bought up for little or nothing, yet are endeavoured to be imposed on 
this kingdom at as high a rate as the manufactory ''s cards." The 
whole animus against the undertaking was due to its endeavour to 
enforce the legislation against illegal importation of re-furbished cards. 
As against the attacks made " by whispers and complaints of querulous, 
envious persons, importers and retailers of old cards, for the alleged 
insufficiency of their work," the approval of the woollen manufactories 
is again quoted, and any calumnies were abundantly disproved by the fact 
that "the manufactory is so well settled and appro ven^" What was 
the upshot of the quarrel is unknown. It is probable that the change 
in the wool trade after the Union made the monopoly no longer worth 
defending. As to its financial results, during an existence of over forty 
years, it is not possible to pronounce a decided opinion. The assertion 
that the stock was thrice lost, early in the history of the concern, is 
confirmed by the fact that Provost Currie, one of the original patentees, 
was in great pecuniary difficulties in 1695-. From that date till the 
Union it would appear that the considerable number of woollen works 
established would increase the demand for carded wool, and consequently 
for wool-cards. Therefore, provided the Leith company could render 
importation sufficiently unattractive, large profits should have been 
made. That the undertaking had at least some measure of success 
is indicated not only by its lengthy existence, but also by the reference 
to the envy of its opponents in the document quoted above. 

1 Parliamentary Papers, 1705 — The Representation of John Hay, Ewan Mac- 
Grigor and Partners. 

2 Ibid., 1695 — Act in favour of James Currie. Acts of the Parliaments of Scotland, 
IX. p. 489. App. p. 124. 


As early as 1590 an attempt was made to establish a paper manu- 
factory in Scotland, but without success ^ It was not till the year 1675 
that it could be said that paper-works were actually founded. Mills 
were built at Dairy, on the Water of Leith, within easy reach of 
Edinburgh. Under the acts of 1661 and 1662 foreigners were brought 
into the country, and the usual privileges granted to the manufacturers. 
The founders of this industry had the misfortune to have to re-erect 
their mills owing to a fire having destroyed the original buildings. By 
1679 the works were able. to produce "grey and blue paper much finer 
than ever this country formerly offered^." On March 7th of the same 
year a petition was presented to the Privy Council, stating that not only 
did the manufactory supply good paper which had hitherto been im- 
ported, but also it was deserving of encouragement through its use of 
rags, " which formerly were put to no good use." The gathering of 
rags gave employment to numbers of poor people, and already many 
Scotsmen had been instructed in the art of making paper. The owners 
of the mills asked that they should receive encouragement by the Privy 
Council suppressing " the faulty custom, not practised anywhere else," of 
employing fine rags for the making of wicks for candles. It was 
represented that cotton wicks ought to be used by the candlemakers, 
which, though dearer, would give better light. In reply to this 
petition, the Privy Council prohibited the use of rags for making 
candle-wicks ^ 

Another paper-mill had been established by Peter Bruce about 1685 
in conjunction with the working of a monopoly he had obtained for 
the making of playing-cards. Bruce fell into monetary difficulties, as 

^ Chambers, Domestic Annals of Scotland, i. p. 195, ii. p. 398. 

2 Ihid., II. p. 398. In 1679 another paper-work was established loj Nicholas de 
Champ on the banks of the Cart. His apprentice erected a larger factory at Miln- 
holm. Glasghu Fades, p. 1224; Smiles, Huguenots, p. 338. 

3 Chambers, Domestic Annals of Scotland, u. pp. 398, 399. 

182 Scots White Paper Manufactory [div. ix. § 6 

he alleged, through a bill of suspension "surreptitiously stolen forth 
against him " by some merchants of Ayr, whom he had prosecuted for 
contravention of his monopoly ^ Eventually the exclusive grant, 
together with the paper-mill, was transferred to James Hamilton of 
Little Earnock, who petitioned for a confirmation of the privileges 
enjoyed by Bruce. He obtained an act of Parliament in 1693, which 
gave the privilege of a manufacture, as defined by the act of 1681, to 
his various undertakings 2. 

These works confined themselves to the production of coarse grey 
and blue paper, the attempts made to manufacture writing paper having 
failed^ As in several other cases, local efforts to found new industries 
did not succeed through want of capital, and because (as recorded in the 
act founding the Scots Paper company) " such undertakings cannot be 
managed otherwise than by a society and incorporation 1" Nicholas 
Dupin, a French refugee, who had already founded Paper companies, 
which were so far successful, in England and Ireland, was encouraged by 
several noblemen to introduce English capital into Scotland for the 
manufacture of white paper. He had already had experience of Scottish 
industry through his connection with the promotion of the Scots Linen 
company, of which he was deputy -governor^ Accordingly, he petitioned 
the Privy Council on July 5th, 1694, asking for the " privileges of a 
manufacture"' according to the act of 1681. He stated that "he had 
arrived at the art of making all sorts of fine paper moulds, as good or 
better than any made beyond seas and at a far cheaper rate, insomuch 
that one man may make and furnish more moulds in one week than any 
other workman of other nations can furnish in two months' time." He 
and his associates "have arts to make the greatest mortar and vessel 
for making paper without timber,'' and they.have also provided " several 
ingenious outlandish workmen to work and teach their art in this 
kingdom ^" The Privy Council granted permission for the establishment 
of paper-mills in Scotland, " but without hindering any persons already 
set up," and also " to put the coat of arms of this kingdom upon the paper 
which shall be made at these mills'." On July 10th, 1695, by act of 
Parliament, Dupin and his partners were granted the privileges of a 

1 Privy Council Papers^ 1G85-6 (General Register House, Edinburgh) — Petition 
to the Privy Council by Peter Bruce, Master of the Manufactory of Playing Cards. 

2 Acts of the Parliaments of Scotland, ix. p. 340. 

3 Petition of Nicholas Dupin to the Privy Council in Domestic Annals, iii. p. 86. 
* Acts of the Parliaments of Scotland, ix. p. 429. 

» Vide supra, pp. 64, 71, 163. 

6 Chambers, Domestic Annals of Scotland, iii. p. 86. 

"^ Ibid., in. p. 87. Though there are several petitions from the company at the 
Register House, the watermark mentioned above cannot be detected in any of 


Div. IX. § 6] Floatation and Organization 1694-7 183 

manufactory, with the right to incorporate themselves under the title of 
the Scots White Paper Manufactory'^. 

On the act of the Privy Council being obtained in 1694, the first 
steps towards starting works had been made, on a small capital outlay. 
The mills appear to have been at Yester^, and there was later a ware- 
house for storing paper in Edinburgh at Heriot's Bridge, in the Grass- 
market^. A month after the passing of the act in favour of the 
company, articles of partnership were signed, on August 19th, 1695, 
which prescribed the internal management of the undertaking and fixed 
the terms for a new issue of shares. At the first general meeting every 
year thirteen shareholders were to be chosen to act as a governing body, 
and these should elect from their own number a Praeses'*. The capital 
already paid in, together with that now offered for subscription, 
amounted to ^5,000 sterling. This was divided into 1,400 shares ^ 
No one person, except by an act of the general meeting, was allowed to 
subscribe for more than twenty shares, so that the minimum number of 
shareholders would have been seventy, if the issue had been taken up^. 
Each five shares entitled the owner to one vote. The shares were 
offered at £^ sterling, or a premium of 12 per cent. In addition, 
each shareholder was to pay a further premium of 18,9. sterling of 
"subscription money" to Dupin at the time of application''. At the 
same time, one-third of the £4^ sterling was to be paid to the treasurer, 
and the remainder " whensoever the same shall be judged necessary by 
the general meeting or a committee of seven persons, to be chosen out 
of their number for that effects" In 1697 Dupin stated that the 
project was likely to have failed for want of enough subscribers, unless 
the promoters had taken up the shares themselves, which at that date 
they were prepared to offer " at a reasonable rate^." 

In 1696 the producing stage had been reached, and according to 
contemporary evidence, enough paper was being made to supply the 
country i**. The next year the company, in support of a petition to the 
Privyj^Council, was able to provide evidence of having produced good 

^ Acts of the Parliaments of Scotland, ix. p. 429. 

2 Parliamentary Papers, 1698— Overture for an Act for the Improvement... of 
the White Paper Manufactory. 

3 Advertisement in Edinburgh Gazette, No. 8, March 23, 1699, Advocates' 
Library (bound with The Scots' Postman). 

* Articles concluded and agreed upon by the Society of the White Writing and 
Printing Paper Manufactory at Edinburgh, the 19th of August, 1695, in the terms 
whereof partners were to be assumed [Brit. Mus. 1391 . c. 21], p. 2. 

s Ibid., p. 6. 6 Ibid., p. 5. 

7 Ibid., p. 7. ^ Ibid., p. 7. 

» Acts of the Privy Council of Scotland, under July 15, 1697- 

^0 Chambers, Domestic Annals of Scotland, in. p. 88. 

184 Scots White Paper Manufactory [div. ix. § 6 

white paper, but it required " a little further encouragement to be an 
advantage to the whole kingdom." 

Mention was made of the great expense incurred in securing foreign 
workmen, and the fact that the making of paper had now been brought 
to perfection. The other industries, that had received special privileges, 
were less generally advantageous than this one, because they depended 
on foreign raw material, whereas paper not only was made from some- 
thing found at home, but utilized what would otherwise have been a 
waste product. The company was able to undersell foreign paper, but 
in view of having introduced the manufacture of white paper, it asked 
the sole privilege of this trade in Scotland for a term of years, " because 
it was unjust that others should reap the reward of their labours," 
especially as the books for subscriptions had remained open for such a 
long time. It was also urged that there was some danger that their 
servants might be enticed away, and therefore they asked further powers 
similar to those conferred upon the Newmills company ^ The latter 
concession was granted by the Privy Council : but, in view of the existence 
of other paper-mills, the monopoly of white paper-making was with- 
held. Having failed to obtain the monopoly, an overture of an act 
was presented to Parliament in 1698 asking encouragement in other 
directions. Apparently the demand for paper, made by the company, 
had increased considerably, for there was some difficulty in obtaining a 
sufficient supply of rags. An act was asked prohibiting candlemakers 
from using wicks made of rags, as in the case of the Dairy Mills ^ 
The candlemakers of Edinburgh petitioned against the draft act, claim- 
ing that they had a prescriptive right to use rags in their trade. The 
Paper company had " in a most clandestine manner " obtained an act 
of the Privy Council preventing them from using rags as heretofore, and 
the candlemakers had raised a process of reduction. The company " fearing 
the reduction would prevail," had brought in the overture with a view 
to monopolizing the supply of rags, reducing the wages of rag-pickers, 
and, in fact, obtaining the raw material at an artificially low price by 
abolition of the competition of the candlemakers ^ The company also 
complained that not only did the government abstain from using 
home-made paper, but that those who imported for official purposes 
ordered much larger quantities than were required, which were sold 
to the public. The draft act also recited that "the importing from 
Holland and the vending here of many English books which are usually, 

1 Acts of the Privy Council, under July 15, 1697. 

2 Parliamentary Papers, 1698 — Overture for an Act for the Improvement ... of 
White Paper. 

3 Ibid. — Representations of the Candlemakers of Edinburgh against the White 
Paper Manufacture. 

Div. IX. § 6] Attack by the CandlemaJcers 1698-9 185 

or may be, printed or reprinted here, is not only a manifest prejudice 
to the improvement of printing and the paper manufactory in this 
kingdom, but may also be the means of corrupting and leading the 
common people of this kingdom into dangerous errors by their reading 
such imperfect Bibles, New Testaments, Psalm-books, and Confessions 
of Faith." Therefore it was proposed to levy a duty of a fixed per- 
centage on all writing or printing paper imported, but this act did not 
become law^ 

In the next year (1699) the company advertized a considerable stock 
of Imperial writing, printing, pressing, and packing papers 2. After 
1699 there is no further direct information as to the fortunes of the 
company. From a curious series of events it would appear, however, 
that, before 1705, the undertaking had ceased to manufacture, and that 
the mills had been let to Evander M'lver. At that date there were two 
Edinburgh newspapers, the Gazette and the Courant. For some time 
there had been a keen rivalry between the proprietors. It happened 
that in 1705 Evander M'lver, who was described as the " tacksman of 
the Scots Manufactory paper-mills," had petitioned the Privy Council to 
complete the reprinting of an English book, entitled War betwixt tJie 
British Kingdoms Considered. The Courant published this petition, and 
the Privy Council, disapproving of the work in question, suspended the 
publication of both newspapers. 

1 Parliamentary Papers, 1698— Overture for an Act, &c. 

2 Edinburgh Gazette, No. 8. 



partners (1693). 
The Company for working Mines and Minerals in the 

Kingdom of Scotland (1695). 
co-partnery for the smelting of minerals (1701). 
John Meiklb's Foundry, Edinburgh (1686-1705). 
Glasgow Hardware Manufacture (1699). 
Glasgow Hardware Manufacture (1700). 

Owing to the generally backward condition of Scottish industry in 
the sixteenth and seventeenth centuries, only partial and unsuccessful 
efforts had been made to develope the mineral resources of the country. 
Mention has already been made of the various undertakings for working 
the mines royal \ During the greater part of the seventeenth century 
coal mining proved unprofitable. In 1621 several proprietors of coal- 
haughs stated that they were <^1 0,000 to ^£^20,000 out of pocket. One 
mine was on fire and others had been drowned, owing to insufficient and 
defective pumping machinery^. 

Towards the end of the seventeenth century the progress of invention 
had made it possible by means of pumping engines to recover mines that 
had become derelict through flooding. In London there were several 
companies formed to exploit patents granted for apparatus of this 
character ^ In 1693 an inventor, named Marmaduke Hudson, came to 
Scotland to form a company for a draining engine which he stated had 
already been tried in Cornwall and which had been found to raise more 
water from a coal-pit in an hour than any other engine could in a week'*. 
Hudson had already obtained a patent in England which secured his 

1 Vide supra J ii. pp. 406-11. 

2 Macintosh _, History of Civilization in Scotland, in. p. 292. 
2 Vide supra, ii. pp. 479-82. 

* Acts of the Parliaments of Scotland, ix.. Appendix^ p. 92. 

Div. IX. § 7] Mining and Smelting Companies 187 

rights in the invention in Scotland also, but he applied to the Scottish 
Parliament for confirmation, because "he well knew that this ancient 
and honourable kingdom has no dependence upon nor can anyways be 
regulate by the laws of England." He was granted the exclusive right 
for 19 years of using the engine he had invented, besides the privilege of 
a manufactured Whether the pumping plant was as effective in 
Scotland as it was said to have been in Cornwall does not appear. 

In 1695 Nicholas Dupin, who had already formed the Scots Linen 
manufacture and White Paper companies 2, succeeded in raising a 
considerable joint-stock for mining purposes, and securing the services of 
trained miners. This company, which was entitled the Company for 
working Mines and Minerals in the Kingdom of Scotland^ had obtained 
leases of mineral properties from several persons. The company 
petitioned Parliament for the privilege of a manufacture and also the 
right of " making pennies, half-pennies and boadles out of the copper of 
this nation, but without hindering any person who had already set up 
mines." The act appears to have been passed with the exception of the 
right of coining; and, in the conferring of the privilege of a manufacture, 
it is explicitly stated that any concession, made to the company by Parlia- 
ment, is to be exclusive of a monopoly^. It is probable that this 
enterprize did not succeed, and its failure appears to be indicated when 
John Binning wrote in 1704 that " the English raised a fund to send 
strangers of late amongst us to discredit our mines'*." 

Though the iron and steel trades were in a very rude state in Scotland, 
one can find traces of improvements being attempted. For instance, in 
1701 an act of Parliament was passed in favour of a co-partnery for 
the smelting of minerals^. 

Meanwhile new industries, connected with the manufacture of iron 
and steel, had been founded. In 1686 John Meikle received the usual 
privileges of a manufacture for the founding of bells and cannons ^ He 
established a foundry, called the Founding House, at Castle Hill, 
Edinburgh. Unlike the great majority of those who obtained privileges 
from the State, he did not take others into partnership, and on his death 
the business was sold in 1705 by his widow ^ 

In 1699 a number of English merchants had brought to Glasgow 

^ Acts of the Parliaments of Scotland, ix. p. 323. 

2 Vide supra, pp. 163, 182. 

3 Parliamentary Papers, 1695— Act in favour of the Company for working 
mines, &c. 

* A Letter to a Member of Parliament [by John Binning], p. 2. 

^ Acts of the Parliaments of Scotland, x., Appendix, p. 99. 

6 lUd., VIII. p. 608. 

7 Edinburgh Courant, No. 16. 

188 Glasgow Hardware Manufactures [div. ix. § 7i 

workmen from the South who were skilled " to work all hardware, such 
as pins, needles, scissors, scythes, tobacco-boxes, and English knives," 
and on petition to the Privy Council the privilege of a manufacture 
was granted. A similar grant was made in 1700 to another group of 
merchants at Glasgow for the same industry, whereby it was anticipated 
that employment would be provided for " many poor and young boys, 
who are, and have been, in these hard and dear times, a burden to the 
country^" In 1703 corresponding immunities were conferred on John 
Dunbabbine for making pins at Aberdeen. 

^ Act of the Privy Council in Chambers, Domestic Annals of Scotland, iii. p. 127. 


The Glass Work at the Citadel of Leith (1664). 
The Glass Manufacture, North Leith (1699). 
Works at Morison's Haven (1696). 
Glass Manufacture at Wemyss (1698). 
The Glass Manufacture at Glasgow (1699). 

Several early patents had been granted for glass works — one of 
which was established at Wemyss in Fife^ but it was not till after the 
Restoration that the industry became permanent. Leith was the chief 
seat of the manufacture during the latter half of the seventeenth 
century. A patent was granted Charles Hay in 1661 with the 
monopoly of making certain kinds of glass 2. On February 9th, 1664, 
the Privy Council, finding that Robert Pape, master of the glass works 
at the citadel of Leith, could make all sorts of glasses, and that there 
was so much importation of foreign bottles and glass that the work was 
in danger of being rendered useless and unprofitable, forbade the public 
to buy or use any other glasses or bottles but these I By 1689 the 
same work could not only produce green bottles but also "chemistry 
and apothecary glasses, in greater quantity in four months than was 
ever vended in the kingdom in a year,^' and at as low a rate as goods of 
similar quality imported from Newcastle or London. The Privy 
Council, besides granting the privileges of a manufactory, repeated the 
act of 1664 prohibiting the importation of foreign bottles, provided 
that the Leith works should not charge more than ^s. 6d. per doz.^ 

About 1699 a company was formed which started works in North 
Leith^. In 1700 a representation was made to the Privy Council 

^ Chambers, Domestic Annals of Scotland, i. pp. 428, 506, 507. 

^ Collection of MSS. lettered '^'^ Scotland — Trade and Manufactures" (Advocates' 

3 Acts of the Privy Council of Scotland, 1661-7, f. 343. 

* I bid. J Oct. 10, 1689; Chambers, Domestic Annals of Scotland, in. ]>. 23. 

^ Leith and its Antiquities, by J. C. Irons, 11. p. 1 43 ; History of Edinburgh, by 
Hugo Arnot, p. 58. 

190 Leith Glass Manufacture 1699-1710 [div. ix. § 8 

stating that the proprietor of the glass works at Newcastle had sent two 
thousand six hundred dozen bottles to Montrose — a quantity, according 
to the Leith company, sufficient to over-stock the whole of Scotland ^ 
The Council ordered the company to seize the consignment of English 
bottles, which was adjudged forfeit to the Crown. In 1706 the master of 
the works was advertizing freely. He declared that bottles and all sorts 
of glass were made "as good as ever was^." In 1710 "chopin bottles'' 
were offered at 26.y. Scots, and in addition "whoever pleases may 
have from the clerk a testificat, which will prevent the buyers being 
imposed upon by getting other bottles under the name of Leith 

The reference in the " testificat " is to the product of other works 
which had been founded in the last years of the seventeenth century. 
In 1696 William Morison of Prestongrange established works for 
making "all sorts of bottles such as vials, drinking, window, mirror, 
and warch [?] glasses'" at his estate at Aitcheson's Haven or Morison's 
Haven*. The Privy Council granted the privileges of a manufacture to 
this undertaking on April 27th, 1697, and in the following year Morison 
petitioned Parliament for a monopoly^. The matter came before the 
Committee of Trade on August 4th, 1698. Although three years before 
it had been decided " to encourage " the glass-making industry^, it soon 
became apparent there was a feeling against any exclusive grant. The 
matter was postponed from the morning meeting; and, at a special 
sederunt in the afternoon, the question was first debated as to whether 
Morison might not be encouraged by an exclusive grant " for some few 
years." This was decided in the affirmative, and the next point was 
the period of the monopoly. Opinions were divided as to whether it 
should be seven or nine years and finally the nine years' term was carried, 
under the condition that Morison should give security to produce 
sufficient glass to supply the country. The grant of an exclusive 
privilege was dealt with in a rather Hibernian manner, for at the close 
of the meeting a motion was brought forward that any other person 
should have the right to set up works after two years. It was proposed 
as an amendment that, in the terms of the original motion, this 
period should be nine years, and finally a term of exemption from 
competition of only two years was carried''. When the bill came to be 

1 Chambers_, Domestic Annals of Scotland, iii. p. 229. For the reasons of this 
export from England^ vide supra, p. 112. 

2 Edinburgh Gourant, No. 185. 

3 Ihid., No. 697. 

* Chambers, Domestic Annals of Scotland, rii. p. 164. 

^ Acts of the Parliaments of Scotland, x. p. 180. 

^ Parliamentary Papers, circa 1695 — List of Acts to be desired. 

7 Ibid., 1698 — Minutes of the Committee of Trade. 

Div. IX. § 8] A Glass Act in Committee 1698 191 

drafted, the grant of special privileges was expressed in the form that 
Morison should have a monopoly for nine years as against the 
proprietors of all works, which had not been set up within two years 
from the date of the act which was September 1st, 1698, and the 
prohibition of foreign glass, granted to the works at the citadel of 
Leith, was confirmed \ Though the only name mentioned in Morison's 
act is his own, it is not unlikely that he had others associated with him 
in the enterprize. Though mirror glass was made at Morison's Haven 
the polishing of it was carried on by a naturalized Frenchman, 
Paul Le Blanc, who had many disputes with the incorporation of 
Wrights of Edinburgh, who impeded him as far as they could 2. In 
1701 he was associated with others in a glass manufactory, and, on his 
application to Parliament for a remission of the duty on unpolished 
glass, a counter-petition was filed by Sarah Dalrymple who had a 
monopoly for importing mirrors ^ 

The clause in Morison\s act, which granted two years' grace before 
the commencement of the glass-making monopoly led to two other 
companies, for the same industry, being formed. On February 22nd, 
1698, David, Lord Elcho, applied to the Privy Council on behalf of 
himself and partners for the statutory privileges in favour of a manu- 
factory of glass, he proposed to establish at Wemyss, where glass had 
formerly been made, and in the following September this co-partnery 
received an act of Parliament similar to Morison's, but saving the rights 
of the latter*. 

It appears from a petition of James Montgomery, one of the partners 
in the South Sugar House^, presented to Parliament on November 12th, 
1700, that the Wemyss company had not at that time started works. 
He proposed to establish a company at Glasgow for making glass and 
soap, stating that it was "the policy and interest of all nations to 
improve industry, especially in societies, who design improvement of any 
part of the natural product of the country." He had found ferns — " a 
most useful material in glass-making" — were very plentiful near 
Glasgow, and in the West Highlands there were large quantities of 
wood-ashes which could be employed in making soap. Glass, made at 
Leith and Morison's Haven, could only be brought to Glasgow " at vast 
charges and great hazard," and besides the latter was too dear. Mont- 

^ Acts of the Parliaments of Scotland, x. p. 180. 

^ Chambers, Domestic Annals of Scotland, in. p. 154. 

3 Parliamentary Papers, 1701— Petition of Le Blanc, Edinburgh, Petition of 
Paul Le Blanc and Wm. Scot, Masters of the Glass Manufactory. This Wm. Scot 
appears to have been the same who in 1693 obtained privileges for a coach-factory. 

* Acts of the Parliaments of Scotland, x. p. 179. 

^ Vide supra, p. ,186. 

192 Glasgow Glass Works 1700-30 [div. ix. § 8 


gomery''s partners had been engaged for the past ten months in erectinj 
works at a large outlay. For these reasons he asks not only the 
statutory privilege of a manufacture, but also additional grants similar 
to those in favour of the works at Leith and Morison's Haven. Morison 
opposed this petition, and there is no record of any concession being 
made by Parliaments In the following year the same petition was 
brought before the Privy Council, when the proposed company was 
permitted to make "glass and soap of all kinds, not secluded by the said 
Morison of Prestongrange and his act of Parliament^.'' In all proba- 
bility this meagre "encouragement"" was not sufficient to enable the 
Glasgow undertaking to hold its own against rivals who had not only 
established businesses but also enjoyed exemption from taxation. It is 
recorded that a new bottle house was erected in 1730, which was 
supposed to be the first, thus proving that the one built in 1699 must 
soon have been used for some other purpose than that for which it had 
been originally intended'. 

^ Acts of the Parliaments of Scotland, x., Appendix, p. 49. 
2 Chambers, Domestic Annals of Scotland, iii. p. 128. 
^ Glasghu Fades, p. 585. 


Gun-Powder Manufacture by James Gordon and partners 

Gun-Powder and Alum Manufactures by Sir Alex. Hope 

AND partners (1695). 
Leather Works (Whitefield Heyter and partners) (1695). 
Leith Combmakers (1695). 
Leith Saw-Mills (1695). 
Porcelain and Earthenware Works at Glasgow (1703). 

In 1690 a London merchant, James Gordon, applied to Parliament 
for a privilege for himself and partners, to enable him to establish a 
gun -powder manufactory. As long as Gordon's powder was sold at a 
reasonable price, importation except by the Privy Council should be 
forbidden. The co-partnery was to have a seal, and all unsealed powder 
was subject to forfeiture. Besides the usual privileges of a manufacture, 
the society was to have the sole right of making powder in Scotland for 
the King's life and for [...] years after his death. The servants of this 
undertaking were to have entry into premises to search for and remove 
the " peterish earth " used in powder making^ There is no evidence as 
to whether this overture was passed by Parliament or not, but, in any 
case, in 1695, there were no powder works in Scotland. In that year Sir 
Alexander Hope and his co-partners asked for encouragement to establish 
both powder and alum works — the latter being attempted for the first 
time. By an act dated July 5th this co-partnery received the privilege 
of a manufacture with the amplification thereof granted to the Newmills 
and Linen companies, on condition that the works were completed within 
two years 2. The works were duly established, and "a great stock of 

1 Acts of the Parliaments of Scotland, ix., Appendix, p. 42. 

2 Ibid., IX. p. 420. 

s. c. III. ]^ 

194 Powder, Leather, Comb Cos. 1690-1702 [div. ix. § 


money" was invested in the two concerns. That applied to the pro 
duction of alum was a complete loss, but the powder works proved a 
success \ About the year 1700 it was testified that " not only was good 
powder made at home but that good and serviceable guns" were also 
produced 2. According to the proprietors, in 1702 "the making of 
powder had been brought to that perfection that no other nation doth 
exceed us^"" They accordingly asked that the prohibition of foreign 
powder, granted them for nineteen years, should not be revoked. 

In the seventeenth century leather was extensively used for house- 
decoration, especially in the form of stamped leather hangings. For a 
considerable period such hangings had been imported, but in 1681 the 
Privy Council granted an exclusive privilege of this manufacture for nine- 
teen years to Alexander Brand, an Edinburgh merchant^. Before the 
expiration of this act, in 1695, Whitefield Heyter, a goldsmith of London, 
applied to Parliament for encouragement on behalf of a proposed company 
for leather manufacturing. The Skinners and other incorporated trades 
protested against the grant of privileges on the grounds that, Heyter 
and his partners being English, the success of the company would mean 
the sending from Scotland of money to pay dividends to the partners, 
also because there was no provision for this company teaching Scottish 
apprentices. Eventually Parliament confirmed a previous order of the 
Privy Council, granting the privilege of a manufacture, subject to the 
conditions that Heyter should accept Scotsmen both as partners and 
apprentices, and that he should not enter any Royal Burgh in the course 
of his trade without an invitation from the magistrates ^ An anonymous 
writer in 1700 mentions leather- work as one of the industries which was 
then in a flourishing condition ^ 

In 1695 an existing co-partnery, which made "all sorts of combs, 
ink-horns, and other works of horn, ivory, or torteshell'"' at Leith, 
received the privilege of a manufacture and of incorporation, on the 
condition that the members should not have a monopoly and that they 
should admit any who wished to join the society''. By 1700 the co- 
partnery consisted of at least seven persons, and trouble had arisen with 
one of the original partners, who had withdrawn from the company. 

1 Parliamentary Papers, 1702— Petition of the Owners of the Gun-powder and 
alum works. 

2 MS. Discourses anent the improvements may be made in Scotland, ut supra, 
f. 15. 

3 Parliamentary Papers, 1702— Petition of the Owners of the Gun-powder and 
alum works. 

* Chambers, Domestic Annals of Scotland, ii. p. 427. 

^ Acts of the Parliaments of Scotland, ix. p. 493. 

8 A Letter to a Member of Parliament, Edinburgh, 1700, p. 9. 

^ Acts of the Parliaments of Scotland, ix. p, 490, 


Div. IX. § 9] Saw-Mill and Pottery Cos. 1695-1703 195 

The seceding member, named William Park, after selling his share 
had secured foreign workmen and was now endeavouring to obtain 
encouragement from Parliament for rival comb works. The original 
" incorporation," though a monopoly had been provided against in the 
act of 1695, now claimed that it alone should have the privilege of a 
manufacture. The members urged that they were all Scotsmen whom 
Park designed to make the servants of foreigners by taking trade away 
from them. " They were capable, yea more capable than Park and all 
his strangers to serve the kingdom \" This strongly-worded protest, 
though it was based on very slight grounds, appears to have sufficed to 
exclude Park from obtaining the privileges he asked. 

In the same year, 1695, parliamentary privileges were granted to a 
saw-mill at Leith. The act was promoted by a William Scot, who 
was probably the same Edinburgh coach-builder that appeared in 1701 
as the master of glass works ^. A number of partners were joined in this 
undertaking, which, besides obtaining the privilege of a manufacture, had 
the additional grant that no other saw-mill should be erected in Leith 
or within a radius of fifteen miles for a period of nineteen years ^ 

Though Robert Douglas of Leith had obtained encouragement in 
1695 to start soap, sugar, starch and earthenware works, he only 
succeeded in establishing the first-named undertaking*. At the be- 
ginning of the eighteenth century there were no china or pottery works 
in actual operation, for, though Douglas had built a kiln at considerable 
expense, he could not bring the undertaking to a producing stage, 
because " owing to the course of trade for the last five years he could get 
none to join in such a public and expensive work."*"* While matters were 
in this condition, William Montgomery of Glasgow applied in 1703 for 
an act incorporating a proposed company, with the monopoly of making 
" lame purslain " for a period of years. Douglas petitioned against any 
such grant, on the ground of the expenditure he had already incurred on 
similar works, and, to let Parliament see that "he was not so much 
concerned for his own private interest as the public good,'' he was 
content to take Montgomery and his partner " into society with him " so 
that the works might be the more effectually carried on^ Finally, 
Montgomery was granted the encouragement he asked with a monopoly 
for fifteen years and the right to form a society ^ 

1 Parliamentary Papers, 1700— Leith Comb Makers. 

2 Vide supra, p. 191 (note). ^ Acts of the Parliaments of Scotland, ix. p. 491. 

4 Ibid., IX. p. 491 ; Parliamentary Papers, circa 1695— List of Acts to be desired. 

5 Parliamentary Papers, 1703— The Petition of Robert Douglas, the ehler and 
younger, soap-boilers of Leith. 

^ Acts of the Parliaments of Scotland, x. p. 111. 





THE BANK OF ENGLAND (incorporated 1694). 

Amongst the many schemes of the years 1691 to 1695 there was one 
which was destined to render signal service to the State, and to become 
an important maker of the financial history of England. This was the 
Bank of England. But to appreciate fully the meaning of its earlier 
history and to recognize !the dangers that beset it in its infancy, it is 
necessary to glance briefly at the state of credit in the country prior to 
the Revolution. On the break-up of the feudal system, it became 
inevitable that, once soldiers needed to be paid and war-material 
purchased, the charges of the government during a period of war should 
be largely in excess of its revenue in time of peace. The deficit was 
eventually raised by contributions paid by individuals, sometimes by 
taxes, sometimes in other ways, but it generally happened that there 
was an interval between the date when the money was required and that 
at which it could reach the Exchequer ^ Not only were the revenues 
anticipated in time of war but, when the personal expenses of a 
sovereign such as Charles II. were large and variable, they were also 
anticipated in times of peace I The ready money was provided in ' 
several ways. First of all the goldsmiths, the early private bankers, 
were in possession of cash or bullion which they lent — at a very high 
rate, sometimes as much as forty per cent. Then there were the 
early chartered companies, such as the Russia, the East India, the 
Merchant Adventurers, and Levant companies. All of these, when they 
had spare capital, and often when they could ill afford it, wei'e forced to 
prove themselves "profitable to the State" by providing money at 
short notice in large amounts. Thus, besides being trading organiza- 
tions, they were also, much against their will, financial institutions 
providing the government with loans for short periods. There were 
also minor expedients such as the farming of the taxes, the exaction of 
a lump sum for the renewal of charters, from both corporations and 
companies, and for grants of patents to individuals. 

^ Cf. infra, Division xv. 

2 Vide supra J Part i.^ Chapters xiv.-xvi. 

200 The Bank of England [div. x. 

The fact that trading bodies were forced to become temporarily 
financial institutions was a heavy handicap to the commerce of the 
country. Capital was violently withdrawn from trade, so that the 
working resources of many undertakings fluctuated seriously, altogether 
irrespective of the requirements of the businesses. This was an evil 
that made the process of recuperation after any war slower than it 
need otherwise have been. Therefore, one of the great wants of England 

enuring the seventeenth century was the specialization of financing the 
overnment by an independent institution that did not engage in trade. 
It follows that an English bank was required that would be primarily 
the agent of the government in providing capital as required. Arising 
out of such functions would be the lending of money to merchants; 
and, by the mitigation of the irregularity of government borrowings, 
gi-eat scarcity or a glut of trading capital would be avoided, and interest 
would fluctuate less violently. The writers of the seventeenth century 
quote the excessively high rate of interest (caused in a large measure by 
sudden diversions of capital from trade), but it is to be remembered 
that such movements must have had a reflex action, though in a less 
degree, and if interest was sometimes mmecessarily high, it was at other 
periods unduly low. For instance, some years prior to 1681, the East 
India company could borrow more money than was required at three per 
cent. — a lower rate than any modern shipping company can borrow 
on debentures ^ 

Then foreign trade was greatly impeded by the high and irregular 
rate of foreign exchange. This was attributable in part to the bad con- 
dition of the coinage, and it was to remedy such a state of affairs that 
the celebrated Bank of Amsterdam had been founded in 1609. This 
institution credited its correspondents with the specie- value of any coin 
lodged with it, so that a merchant knew exactly how much was to his 
credit at Amsterdam to answer any liabilities falling due there. 
Whereas, if he had had to remit coin for each transaction, it would 
always have been a matter of considerable uncertainty how many of 
a certain denomination of English coins would be required to pay 
his debt, since such coins, through clipping, varied materially in 

In view of such facts, it had long been proposed in England that 
a bank should be founded to give merchants advantages similar to 
those enjoyed by their competitors in foreign countries. As early as 
1646 an elaborate scheme was published by John Benbrigge. He 
suggested the foundation of two distinct kinds of bank — the one called 
mo7is pietatis, the other mons negotiationis. The latter was to be " a 

1 A Collection of Letters for the Improvement of Husbandry and Trade, by John 
Houghton, 1681, i. p. 149. 

Div. X. § 1] Early English Banking Schemes 1646-61 201 

bank of trade, i.e. such a sum of money as should always be ready and 
able, on good security, to lend on usury to such, as in their trading, 
shall have occasion to borrow." Two methods are indicated by which 
the proposed bank could secure capital. The one, which is styled mons 
recuperationis, where the subscriber accepts for his capital an annuity of 
a fixed amount, terminable at his death. The other system is an out- 
line of the principle of joint-stock banking, which is called mons Jidei, 
except in so far as it appears that a fixed dividend of seven per cent, 
was contemplated, a proposal which shows that the fluctuating nature of 
banking profits was not understood^ — unless indeed it was contemplated 
that the proposed bank should have a monopoly, and that the existence 
of a moderate maximum dividend would operate for the protection of 
borrowers, in tending to keep the rate of interest low, just as the 
" maximum dividend " of the early gas acts of the nineteenth century 
was at first supposed to afford adequate protection to consumers. Other 
attempts to repair the losses of the Civil Wars, by the extension of 
credit, may be found in the proposals for a bank of exchange in 1650^ 
and of Samuel Lambe in 1658^ Again in 1661 Sir Gilbert D'Ouvilly 
proposed the foundation of a bank of exchange, which was to have a 
large stock, " with a coinage of his own called bank-money."" It is 
significant of the temper of the time that the scheme provided that the 
government should be ^' fitting^'' "so as to remove all jealousy of its 
falling into the hands of those who hold the militia^" Another pro- 
posal of the same date supplements the former by outlining the formation 
of banks for making loans. 

The stop of the Ex<;hequer in 1672 by Charles II., with the con- 
sequent embarrassment of some ten thousand families^, again directed 
attention to the question of a proposed joint-stock bank. Though 
there were many private bankers of very high repute, several of these 
businesses at the time were carried on in a highly speculative manner. 
The conduct of one such undertaking — that founded by Richard 
Thompson in 1670— will illustrate the dangers to which depositors were 
subjected. Thompson soon took several other persons into partnership 
with him, and the firm became known as Thompson and company. He 

1 Usura Accomrmdata; or a Ready way to rectify Usury..., by J. Benbrigge: re- 
printed in The Writings of William Paterson, edited by S. Bannister, London, 1858, 
II. pp. 311-17. 

2 State Papers, Domestic, Inter., ix. 64; Calendar, 1650, p. 182. 

3 Seasonable Observations humbly offered to his Highness the Lord Protector, by 
Samuel Lambe of London, Merchant— Certain Proposals for establishing a Bank at 
London, by Samuel Lambe in Somers' Tracts (1751), x. pp. 164, 180. 

4 State Papers, Domestic, Charles XL, xl. 131 ; Calendar, 1661-2, p. 78. 

5 Defoe makes the number of distressed families 20,000— The Consolidator : or 
Memoirs of Sundry Transactions from the World in the Moon, 1705, p. 75. 

202 The Bank 0/ England [dit. x 


with his partners formed "a society amongst themselves," and in the 
short space of five and a half years, they managed to embark in ventures^ 
in the wine, silk and Russia trades, besides taking interests in inter«^ 
loping expeditions to India, in mines, in Irish manufactures and in 
dealings in exchanged It is scarcely necessary to add that, when a run 
came in 1675, the " bank " could not stand it, and was forced to suspend 

There is something of poetic justice in the fact that, although 
Charles II. evaded his obligations towards his creditors in 1672, when 
he found it necessary to seek financial assistance at a later date, he had 
to pay for the discredit he had caused by offering as much as thirty per 
cent, interest. Not only so, but, owing partly to the high price of 
advances, partly to the extravagance of the Court, anticipations of 
the revenue became common, so that a great part of the revenue of 
the Crown at length came to pass through the hands of the bankers*. 
Again, the trading capital of the country was depleted, and on this 
occasion the merchants determined to help themselves by founding a 
" National Bank of Credit." The scheme was proposed in 1676^, with 
the object of lending money to merchants on the security of their 
goods : whereby it was believed that tradesmen " in raising a credit 
on their dead stock, could employ their servants and increase their trade 
instead of selling at a loss^" In 1681 and 1682 this bank, which was 
then in operation, charged six per cent, interest for loans, which sum 
was inclusive of warehousing charges ^ By 1683, if Anderson's date 
may be relied upon, the bank, " though it had made a mighty stir for 
a time, came to nothing^" The failure of this scheme, added to the 
suspension of private bankers from time to time, made the problem of 
the improvement of credit all the more urgent, since it was calculated 
that, up to 1694, the depositors of the goldsmiths and scriveners had 
suffered to the extent of between two and three millions ^ 

Although "the Office of Credit" proved ineffective, its existence 

1 The Case of Richard Thompson and Company, London, 1678 (Brit. Mus. 
1417. h. 42), pp. 3-6. 

2 Bank Credit; or the usefulness and security of the Bank of Credit examined in a 
Dialogue between a Country Gentleman and a London Merchant, 1678. 

3 Proposals for the Advancement of Trade upon such Principles as must necessarily 
enforce it, by R. Murray, 1676. 

* Bank Credit, ut supt-a; '^^ England's Interest, or the Great Benefit to Trade of 
Banks or Offices of Credit in London" — State Papers, Domestic, Charles 11. , 
ccccxxxvm. 31. 

^ A Collection of Letters, by John Houghton, ut supra, i. p. 140. 

^ Annals of Commerce, iii. p. 92. 

7 A Short Account of the Bank of England, by Michael Godfrey, Somers' Tracts 
(1748), II. p. 689. 

Div. X. § 1] Financial Stringency 1692 203 

showed that the demand for an important bank was growing^ Every 
argument that could be urged in favour of the project before the Revo- 
lution held with increased force afterwards. The new government 
literally did not know where to turn for money during the first years 
of the reign of William III. Members of the ministry were forced to 
make frequent pilgrimages into the City to borrow, as they could and 
at almost any price. A contemporary writer gives the following 
description of the state of the credit of the government — " The funds 
were run down, the credit jobbed away in Change Alley, the King and 
his troops devoured by mechanics and sold by usury, tallies lay bundled 
up like Bath faggots in the hands of brokers and stock-jobbers. The 
Parliament gave taxes, levied loans, but the loans were at the mercy of 
those men (the jobbers) — and they showed their mercy indeed by 
devouring the King and the army, the Parliament and indeed the whole 
nation — bringing their great Prince sometimes to that exigence, through 
inexpressible extortions that were put upon him,... that the regiments 
have been uncloathed when the King has been in the field, and the 
willing brave English spirits, eager to honour their country and follow 
such a King, have marched even to battle without either stockings or 
shoes, while his servants have been working every day in Exchange 
Alley to get his men money of the stock-jobbers, even after all the 
horrible demands of discount have been allowed and at last scarce 50 
per cent, of the money granted by Parliament has come into the hands 
of the Exchequer and that late, too late for service and by driblets 2." 
Omitting the exaggeration of this picture, it must be admitted that it 
contains a foundation of fact. It has already been shown how great 
had often been the straits of previous sovereigns in war-time for funds', 
and the position of William III. after the Revolution was much more 
unfavourable. The change of government had involved a shock to 
credit, and besides the great joint-stock companies were unable to lend 
money. Thus the security was worse, and the usual sources of loans 
were closed: so that it was probably true that in 1692 money could 
only be raised "by driblets." Parliament was therefore forced to offer 
sufficient inducements to tempt the owners of capital to subscribe 

1 "Public Banks are of so great a concern in trade that the merchants of 
London, for want of such a bank, have been forced to carry their cash to goldsmiths 
and have raised such a credit upon goldsmiths' notes, that they pass in payments 
from one to another like notes upon the bank ; and, although by this way of credit 
there have been very vast sums of money lost not less than two millions within 
five-and-twenty years, yet the dispatch of trade is so great by such notes that the 
credit is still in some measure kept up "—A Discourse of Trade, by N. Barbon 
(ed. J. H. Hollander, 1905), p. 19. 

2 Quoted by Francis, History of the Bank of England, i. p. 59. 

3 Vide supra. Part i.. Chapters ii., v. 

204 The Bank of England [div. x 


funds in considerable sums. Evidently it would be necessary to give 
any body of persons providing capital, in circumstances of such risk, 
not only a high rate of interest but also some other substantial privilege. 
Now the rights of a corporation were greatly esteemed ; and, from the 
point of view of the government, the granting of a charter of incor- 
poration would have the advantage of securing the subscription of a 
large amount of capital at one time. Ideas such as these became 
diffused amongst the "Committee appointed to consider means for 
raising funds to carry on the war" which reported on January 18th, 

1692. Offers of any large sum, as a loan, were made subject to the 
right of the subscribers to circulate paper money. The two most im- 
portant proposals emanated from William Paterson on the one hand 
and Hugh Chamberlain on the other. Paterson and his supporters had 
proposed to raise ^1,200,000, of which =£^1 ,000,000 was to be lent to the 
government at six per cent, with =£^5,000 a year for management, and the 
remaining ^£^200,000 was to constitute the capital of a proposed bank, 
" the bills of which should be current." The last clause suggests that 
the syndicate aimed at a banking monopoly ; and, in any case, the 
Committee interpreted the proposal in this sense and referred the pro- 
position back to the promoters of it, remarking that it could not entertain 
any proposition that involved the forcing of bills on persons without their 
consent. Paterson thought the scheme could be modified accordingly, 
but his supporters were not, at first, willing to do so^ Chamberlain's 
scheme proposed the issue of an inconvertible paper currency, based on 
landed-security. Though a committee of the House of Commons 
reported in favour of this project in 1693, the whole assembly re- 
jected it in that year. Judging from the methods of the Land bank, 
Chamberlain could only have made his loan to the State in his own 
bills, and the question of depreciation had to be considered ^ In 
addition to the merits of the case, there was the influence of the existing 
political situation. The idea of a land bank would appeal to the 
landed-interest or the Tories, while on the contrary Paterson's scheme, 
being addressed to the " monied-men," would claim the support of 
the Whigs. As often happens, it was in all probability neither the 
abstract merits of the respective schemes on which they were judged, 
nor yet on party lines, but on a mixture of both. Towards the end of 

1693, the need of money became more pressing ; and, though offers had 
been made, no funds had actually been secured. Paterson again came for- 
ward with a revised proposal, which provided for a loan of ,^^1, 200,000 to 
the State at eight per cent., and for the incorporation of the subscribers as 
a bank. The need for money being great, this offer was accepted, and 

1 Journals of the House of Commons, x. p. 621. 

2 Ibid., X. pp. 22-80. 

Div. X. § 1] Foundation oj^ the Bank 1694 205 

in 1694 a series of clauses were inserted in the " Ways and Means 
Bill" of that year, which authorized the founding of the Bank of 
England \ 

Thus the Bank, unlike the East India and Royal African companies, 
came into existence with parliamentary sanction. The act of 1694 
provided that persons, who would subscribe ^6*1, 200,000, at eight per cent, 
with an additional d£'4,000 a year for the management of the fund 
should, on the completion of one-half of the subscription, be entitled 
to receive a charter from the Crown, incorporating them as the Governor 
and Company of the Bank of England. To prevent the possibility of 
the "engrossing of the stock," it was enacted that no person should 
subscribe more than ^10,000, nor could he hold more than dg'SOjOOO stock. 
The Bank, when established, was precluded from owing more than the 
amount of its capital, on a penalty of the individual stockholders 
being liable for thrice the excess so lent, nor could it trade in any 
goods, wares or merchandize. It was authorized however to deal in 
bullion and bills, to issue notes and to lend money on the security of 

The subscription lists were opened on June 21st, 1694. Liberal 
discounts were allowed for early subscribers, and on the first day 
.^300,000 of stock had been applied for. Within the following two 
days more than this amount had been taken up, so that by June 23rd the 
subscribers had fulfilled the condition entitling them to a charter. By 
July 2nd the whole authorized capital had been issued, and on July 24th 
the charter was signed. 

The charter provided for the internal management of the affairs of the 
Bank. Hitherto the officials, who were subordinate to the governor, were 
described as " assistants " or " committees." Now, probably under the 
influence of Paterson, they are named "directors 2." The members of 
the company were authorized to elect a governor, a deputy-governor 
and twenty-four directors, of whom thirteen constituted a quorum, of 
which the governor or deputy-governor must be one. The qualification 
of the governor was the holding of at least <^4,000 stock, that of the 
deputy-governor at least ^^3,000, and of a director at least d^2,000. There 
had been considerable discussion as to voting rights in the East India 

1 Will, and Mary^ cap. 20. 

2 The same title was used in the following year by the Darien company^ which 
was also promoted by Paterson, vide supra, ii. p. 208. The term ^^ director" in 
this signification came into use in the first quarter of the seventeenth century. 
Thus the officials of the Russia company, described as assistants in the charter, 
were sometimes spoken of as directors. Again the Joint-stock of the Virginia 
company (which was proposed for importing tobacco) was to be under the control 
of a director, vide supra, ii. pp. 50, 277- 

206 The Bank of England [div. x. 

company^, and those, who maintained that a few large stockholdei 
influenced the whole policy of that company, had obtained so much 
support that it was arranged that no one should have more than oiie 
vote whatever stock he owned, and the minimum holding for a vote was 
^500. It was also provided that dividends could only be made from 
the income received from the State and from profits. As in the act, 
the company was determinable on one year's notice after August 1st, 
1705, on the repayment of the loan of J'l, 200,000 with all arrears of 
interest, if any 2.. 

The history of the Bank of England from 1694 till the end of 
1697 is of very great interest. It has been told with great detail by 
Thorold Rogers, so that it will only be necessary to summarize the 
leading events with the addition of certain transactions, which are 
requisite for a right understanding of an exciting three years of 
financial history ^ 

Although .^1,200,000 was " subscribed," this amount was not paid up 
in full till some years later. Each subscriber deposited 25 per cent, of 
the amount, he applied for, during the time the books were open. A 
second 25 per cent, was paid up on or before September 27th, and 
10 per cent, on or before November 27th. No additional calls were 
made for some time, so that the stock remained with 60 per cent, paid 
up. Therefore, although c£^l ,200,000 stock was allotted, the instalments 
called by the company brought in only ^720,000. This left a deficiency 
of exactly half a million to be provided, to complete the loan for the 
government. Payments had been made by the Bank to the Exchequer 
of .g'300,000 about August 3rd, and a second .^300,000 about 
September 27th — thus transferring the calls of the stockholders as they 
were received. Meanwhile banking was being prosecuted vigorously, 
and in December the remainder of the loan was paid — part being 
provided by the call of 10 per cent, in November and the remainder 
out of the banking funds*. The eflfect of this operation was that the 

1 Vide supra, 11. pp. 153-8. 

2 The Charter of the Bank of England, printed in The History of Banking, by 
W. J. Lawson, London, 1850, pp. 448-64. 

3 The First Nine Years of the Bank of England, by James E. Thorold Rogers, 
Oxford, 1887. '^ The Statement showing the Capital of the Bank of England from 
1694 to 1897 prepared by Mr J. F. Stutchbury under the authority of the Governor," 
and printed in The History of the Earlier Years of the Funded Debt from 1694 to 1787^ 
London, 1898 (Blue Books [c. 9010]) is an admirable piece of work. I am also 
indebted to Mr Stutchbury for his extracting for me from the records of the Bank 
the dividends paid till 1720. This list {vide Summary of Prices of Stock and 
Dividends, p. 243) corrects that of Francis printed in History of the Bank of 
England, 11. p. 267. 

* Earlier Years of the Funded Debt, p. 67. 

Div. X. § 1] Only ^Oper cent, paid up on Stock 1695 207 

stockholders had found dg'720,000, and they were receiving interest 
on J*l ,200,000 at 8 per cent., so that the payment made by the 
government would have provided a dividend of 13 J per cent., sub- 
ject to the cost of obtaining the half-million, not raised from share- 

It would be idle to criticize this method of finance by modern 
standards. Capital was scarce, and what had escaped the demands of 
the government had gone to float the many industrial ventures that 
were prevalent at the time. Probably it would have been difficult, it 
might even have been impossible, to have obtained payment in full 
from the stockholders, and some such inference is suggested by the 
call of November being one of 10 per cent, instead of 25 per cent, as 
before. Even the knowledge that this small payment was impending 
was sufficient to depress the price of the stock. In fact the course of 
quotations during the year 1694 is most instructive. Houghton first 
mentions Bank stock on August 17th. On August 15th and also on 
the 22nd the price quoted was 102. The next week it was 101. Then 
for three weeks 100, for a fortnight 101, and for three weeks again 103. 
These figures may be interpreted as " from par to 3 premium,'** since on 
October 30th the quotation of 57 is given "on the money paid in," 
i,e. a premium of £1 on the ^50 then called up. The price fluctuated 
between 57 and 61 for a month, and the apparent rise to 70 on 
November 28th is attributable to the inclusion of the 10 per cent, 
call in the price. It soon became known that further calls were not 
to be anticipated, and the price rose during December from 70 to 76. 
In the year 1695, the first quotation was 74; and, by the end of 
January, 90 had been reached. In view of the announcement of a 
dividend of 6 per cent., paid on March 25th, the price was 99 on 
March 20th. The apparent fall the following week is really due to the 
stock being " ea^ dividend," and it was not till June 26th that 99 is again 
quoted. Between August and the end of September, fluctuations were 
very small, only from 94 to 98, and in October the deduction of the 
second dividend of 4 per cent, (making 10 per cent, for the year) left 
the price nearly constant. In December there was an abrupt rise from 
94 to 100. This continued in the first weeks of January 1696 until 
108 was quoted on the 8th, after which there was a rapid decline to 83 
on February 12th, on the "passing of the dividend" and other un- 
favourable circumstances. After a temporary revival, the fall continued, 
and the price was 82 on March 18th. It kept fairly steady, in spite of 
the run of May 6th, but afterwards it gave way rapidly, till by the 
middle of October 60 was quoted. This was the lowest point of the 
year, and it was followed by an improvement, which however was only 


208 The Bank of England [div. x. 

The causes which brought about a fall in the price of Bank stock 
from 108 to 60, and that precluded the payment of a dividend in 1696 
are worth studying, if only as showing the peculiar dangers to which 
the institution was subjected in the first years of its existence. The 
Bank of England had come into being as a result of a period of 
industrial activity, and it had to pay the penalty of its origin. 
Immediately its success seemed to be probable, new bank schemes were 
brought forward. In 1695 a money bank was proposed, a bank "of 
paper-notes of credit,*" a London bank, promoted by the City magis- 
trates, which a contemporary writer described as " bound to miscarry, 
because the conduct of the Chamber was so bad that the City was 
without credits" Besides these proposed banks there were two actually 
founded, one the Orphans'" bank, connected with the Orphans' Fund-, 
which was said in 1695 " not to have the shadow or substance of real 
good'' and the other the Million bank'. A more dangerous rival than 
either of the latter was the Land bank. This scheme had been con- 
sidered as an alternative to the foundation of the Bank of England, and 
had not been accepted in 1694 ^ But in 1696 it appeared to Parlia- 
ment, or perhaps rather to the ministry, that the Bank of England had 
raised what money it could, and that other sources of loans must be 
sought. Besides, the Bank of England was a Whig institution, and the 
Tories still hankered after a land bank. Therefore, when early in 
February the House of Commons had voted in favour of establishing a 
land bank ^, there followed the serious fall in Bank stock already noticed. 
This however was only the beginning of the misfortunes of the Bank of 
England. The government, after making it the agent for effecting the 
calling in of the old coinage and the issuing of the new, treated the 
court with a remarkable want of consideration. The clipped money 
had been called in by May 4th, 1696, but the Bank had not received 
the new coins in sufficient quantities from the mint. On May 6th a 
run was made on the Bank ; and, owing in a large measure to the neglect 
of the government, it was forced to suspend payment of its notes in 
cash. Arrangements were made to pay a part of any notes presented 
in cash and the remainder as soon as coin could be obtained from the 
mint. Thus the notes ceased to be convertible; and, although the 
Bank undertook to pay interest, they soon were at a discount, some- 
times of as much as 20 per cent. To meet these adverse circumstances, 
it was proposed in May to call up 20 per cent, on the capital, but this 
scheme was merged in another by which the proprietors advanced the 
money to the Bank as a loan. 

1 Anglice Tutamen, pp. 11-15. ^ Vide supra, pp. 12, 54. 

3 Vide infra, Section 4 of this Division. * Vide supra, p. 204. 

^ Vide infra, Section 2 of this Division. 


Div. X. § 1] The Crisis of 1696 aiid its Effects 209 

When the crisis had been occasioned in part by the remissness of the 
government, it is somewhat curious to find the Bank being approached 
on August 15th, 1696, to lend ^£^200,000 to the King " in the present 
exigency/' At the same time the governor and proprietors were informed 
" that they were now assured of all the encouragement and support the 
government could give them, and that, as a mark of it, divers great 
men had given orders for the buying of Bank stock and that some have 
already bought \'' In spite of this support to the market in the 
company's stock, the price continued to fall. It had been 70 in the 
middle of August and, under rumours of a call, it fell to 60 in October. 
This call was fixed at 20 per cent, and was payable on or before 
November 26th. Therefore the prices, quoted in the end of that month, 
are for the stock with £H0 called up, that recorded on November 18th, 
80, being exactly par. During the remainder of the year the quotation 
declined, the last price, on December 22nd, 73, being considerably 
below par. 

During the end of the year 1696 and the first half of 1697, the 
credit of the government was very low. The pressure of the war began 
to be felt, and money became scarcer and scarcer. " The ministry," 
Davenant writes, " was like a distressed debtor, who was daily squeezed 
to death by the exorbitant greediness of the lender. The citizens began 
to decline trade and to turn usurers^.*" In these circumstances an appeal 
was again made to the Bank, which in December 1696 was asked to lend 
the government two and a half millions. To have endeavoured to 
comply with this demand would have meant the most serious con- 
sequences for the Bank. Its notes were at a discount of \6\ per cent, to 
17 per cent., and the call of 20 per cent., made in October, had only 
been paid in part. The stock was quoted below par; and, although 
on December 4th, 1696, an account was presented to the House of 
Commons, showing a surplus of assets over liabilities of <£'^125,315. 2^. lie/., 
the cash in hand was no more than £Q5fiQ^. Is. \0d. It will therefore 
be evident that the most the Bank could do would be to maintain 
its credit ; and, if possible, to assist the government in any way that did 
not involve a subscription or a loan in cash. By January 1697 a way 
appeared by which this might be done. One of the great difficulties 
of those controlling the national finance was the depreciation of the 
government tallies, which were sold at this time at about 40 per cent, 
discounts Now, although the government was unable to extinguish 

1 State Papers, Domestic, Will. III., 1694 to 1696, No. 231. 

2 An Essay upon Loans, 1710, in Somers' Tracts (1748), ii. p. 13. 

3 The Consolidutor : or Memoirs of Sundry Tranmctions from the World of the 
Moon, 1705, p. 40; ^ short History of the Last Parliament, by — Drake, M.D., 1699, 
in Somers' Tracts (17-50), viii. p. 180; An Essay upon Loans, 1710, Ibid., ii. p. 13. 

S. C. III. 1"^ 


210 The Banh of England [div. x. § 

the tallies, it was in a position to pay interest to anyone who could 
hold these tallies ; and, if they were taken off* the market, the credit of 
the State would be improved. On the other hand, the Bank could not find 
the capital to discharge the tallies, but its credit remained sufficiently 
good to deal with them by another method. It was proposed, in 
January 1697, that the capital of the Bank should be temporarily 
increased, and that payment for the amount subscribed might be made, 
as to four-fifths, in tallies and, as to one-fifth, in bank-notes. But 
there still remained one difficulty to be surmounted. The existing 
stock had only eighty per cent, called up, and there were surplus assets 
in hand. It would have been highly inequitable that new subscribers 
should be allowed to come in and pay their subscriptions in a depre- 
ciated security, while sharing in the reserved profits. It was therefore 
provided, by the Act 8 and 9 Will. III. cap. 20, that on or before 
June 24th, 1697, the surplus should be dealt with as follows. First, 
the holding of each of the proprietors should be credited as fully 
paid up, and then any amount, still remaining, was to be divided to 
them. This system, while almost unavoidable in circumstances of 
peculiar danger, was a result of an utterly vicious principle of finance, 
which was prevalent during the reign of William III. It was supposed 
that the normal type of joint-stock company was one which resembled 
the early form of the capital of the East India company, which was 
to be periodically wound up to be followed by a new subscription ^ 
This idea arose from the financing of trading voyages and was justifiable 
as long as such undertakings were monopolies, and there was no free 
market in the stock. But after the Revolution anyone, who wished to 
purchase an interest in the larger companies, could have his order 
readily executed, so that there no longer remained any reason for 
the winding up of a stock. Further the disadvantages were great. 
This method precluded the formation of a strong reserve fund, which 
was necessary, when trading of all kinds was subject to great risks. So 
that, possibly with the best intentions, the government, by sanctioning 
this policy in the cases of the East India company and the Bank of 
England, was making commerce more speculative than it need have been 
and was adding to its own difficulties. 

These facts enable one to interpret the quotations of Bank stock 
during the first seven months of 1697. Persons, who were in default in 
paying the call of 20 per cent., had to sell some stock, and there were 
no buyers at the prices which had been quoted in December. A little 
consideration will show the reason of the fall. The existing stock, 
which was then ^^80 paid, varied between 80 on November 18th, 1696, 

Vide supra, u. p. 97. 


Div. X. § 1] Issue of the Engrafted Stock 1697 211 

and 73 in the last fortnight, in December. Now the surphis assets 
might make good the 20 per cent, still outstanding ; but, on the other 
hand, a call might have to be met. Once the terms of the issue of new 
capital were made known, it became evident, taking tallies at 40 per 
cent, discount and bank-notes at 17 per cent, discount, that about £65 
in cash would purchase tallies and notes enough to pay for ^100 of the 
new fully paid stocks So that in fact, since Bank stock was at par in 
November 1696, the price had to be readjusted to allow for the discount 
on tallies. In other words, that discount was transferred from the 
tallies to Bank stock. Indeed, in view of a possible additional call, it 
even went further, and the old J'SO paid stock fell to 55 for cash on 
January 20th ; and, in the first fortnight in February, it touched 51 for 
cash and 62^ for payments in bank-notes — this being the lowest price 
of the year. Afterwards, there was a slight rise, which reached 61 on 
June 2nd, followed by a fall to 60J in the following week — both prices 
being for cash. Houghton continues this quotation until September 3rd, 
and it is probable that the books were closed, pending the calculation of 
what was due to the old proprietors. The result turned out to be very 
favourable, allowing the payment from reserve of the 20 per cent., required 
to make their stock fully paid, and in addition a distribution of £S. 10s. 
per cent., both of which had been paid by July 24th, 1697. The effect 
of this readjustment does not appear in the price of the stock till 
September, when the conclusion of peace gave an impetus to the market. 
On September 8th the quotation was 82, and the following week it had 
risen to 98, so that practically the whole of the discount on the tallies 
and bank-notes, taken in payment for the new capital, had now been 

In concluding this early stage in the career of the Bank, it will not 
be unprofitable to touch briefly on its policy and the position of the 
stockholder. The author of AngUoo Tutamen^, writing in 1695, condemns 
the enormous dividends paid by the Bank, but during the three years 
prior to the re-arrangement of its capital, it had only paid 10 per cent, 
in 1695 and, as ordered by act of Parliament, 23i per cent.^ on June 24th, 
1697. The position of an original stockholder, who had subscribed for 
.^100, might be described as follows. He had paid ^80 for the stock, 

1 Payment might be made as to four-fifths in tallies and one-fifth in bank-notes. 
Tallies were at a discount of 40 per cent., bank-notes at a discount of 16| per 
cent, to 17 per cent. Therefore of the payment for £100 stock, £80 was subject to 
a discount of 40 per cent, and £20 to a discount of 16| per cent, to 17 per cent. 
So £48 cash would purchase £80 tallies and about £17 cash £20 in bank-notes. 
Thus about £65 cash would secure the specified proportions of tallies and notes. 

' p. 7. 

3 This is the dividend for 1697 up to the re-arrangement of the capital. Later 
in the year 4 per cent, was paid making a total of 27| per cent. 


212 The Bank of Engla7icl [div. x. 

credited him as fully paid by the bonus of 1697. Taking the high( 
price after the declaration of peace, namely 98 on September 15th, he 
would have a profit of 18. To this are to be added the remaining 
dividends, namely 10 per cent, on ^60 paid up {i.e. £Q) and 3J per cent., 
making =£*9. 10^. Adding together the possible profit and the dividends, 
a total gain of £9^1. 10*. on £S0 is obtained, or an average annual 
increase of over ^9, representing about 11 J per cent, annually. Making 
a similar estimate with the lowest subsequent price in 1697, namely 
86f on November 24th, the increase in capital value would have been 
only 6 1, which, with the addition of the dividends paid in cash as 
before, would give a total appreciation over the three years of 16^ or a 
little over £5 annually on the original £S0^ or an average annual 
increase of not quite 7 per cent. So that, taking account of the market 
price in the last four months of 1697, the position of a stockholder was 
that he might have retired from the company with a nett average 
annual appreciation on his investment of between 11^ and 7 per cent. 
It will thus appear that the Bank had so far been ill-rewarded for the 
services it had rendered to the government ; since, although the dividends 
declared amounted to 33J per cent, for the three years, 20 per cent, of 
this was paid in stock, and the forcing the Bank to receive depreciated 
tallies, by reducing the price of the stock, reduced also the amount of 
this 20 per cent, bonus in stock. 

From the point of view of the general policy of the Bank as a whole, 
this period of three years was one in which unexampled difficulties had 
been successfully overcome. It is true the Bank, whether through want 
of experience or compelled by necessity, had made one serious mistake, 
namely the contracting of the calls paid up on its stock, and making 
good half a million of the loan to the government out of funds em- 
ployed in banking. This meant that at the least 40 per cent, of the 
deposits and other loans was locked up and could not be made available 
— unless by a call on the proprietors as had to be done in 1696. What 
made this device so serious was that it was the same policy which was 
later adopted by the South Sea company with most disastrous results in 
1720, namely the issue of much less of the company's securities than 
the amount of the government debt due to it. Closely connected 
with this system of finance was the over-issue of notes, which showed 
itself by the discount that was charged during the time of the 

Apart from these errors, which after all were probably incident to 
the state of credit and knowledge at the time, the success of the Bank 
was remarkable. It had to support an embarrassed and ungrateful 
government, and to find money for it, after it appeared that capital 
could scarcely be obtained on any terms. The Bank succeeded, not only 

Div. X. § 1] Profits and Policy 1694-7 213 

in financing a tedious war, but in lowering the rate of interest at home 
and the exchange abroad. The main causes that made for its success 
were the impetus given to trade and manufactures by the change of 
government, the uprightness of the dealings of the company, and lastly 
the thoroughly democratic organization of its internal affairs, under which 
the proprietors were taken into the confidence of the court and consulted 
as often as any fresh phase of one of the numerous crises, through which 
the Bank passed, arose. The consequence was that the stockholders 
were loyal to the directors and the company. This meant that they 
strengthened the hands of the management, and such a state of affairs 
tended, in a large measure, to maintain the credit of the institution. 

The ten years from July 1697 to July 1708 constitute a new epoch 
in the history of the Bank, of which the most important characteristics 
are the political situation and, partly as arising out of it, the change 
that had been made in the capital. The Bank had been founded during 
a time of war abroad and of keen competition in banking at home. It 
was now to experience the benefits of peace and the mitigation of rivalry. 
The less stable banking ventures had proved failures, the Land bank 
had come to no good result, the Million bank had already, or was soon, 
to retire from banking, and the competition of the Mine Adventurers^ 
and the Sword Blade companies ^ had not begun. It was part of the 
prudent policy of the Bank to utilize these favourable circumstances to 
strengthen its position by extinguishing gradually the new capital created 
in 1697. Such a contingency had been provided for in the Act 8 and 9 
Will. III. cap. 20, which distinguished between the original capital and 
the new stock, which was then created. The latter was known as " the 
Engrafted Stock'' and it was provided that the Bank might pay off* 
instalments of this capital, as it received money for the tallies, which 
had been handed to it in payment by the subscribers. The government 
guaranteed 8 per cent, interest on the tallies outstanding, so that the 
Bank was receiving 8 per cent, on the loans made to the State, against 
which it had issued its own stock. This act also provided that no other 
corporation, numbering more than six persons, might set up banking in 
England. The company could not be determined before August 1st, 
1710. The stock of the Bank was made personal estate and was exempt 
from taxes. No contract for the sale or purchase of stock was valid, 
unless registered within seven days in the books of the Bank. As 
showing the tendency to provide against the management remaining too 
long in the same hands, it was enacted that not more than two-thirds of 
the directors, retiring in any one year, might be elected in the next or 
succeeding year. 

1 Vide supra, ii. pp. 451-3. 

2 Yi^ infra, Division xii.. Section 3 b and c. 

214 The Bank of England [div. 

According to this act, subscriptions for the new capital were 
received up to June the 24th, 1697, and in all i?l,001,171. 10,9. was 
subscribed. This, added to the original capital, made a total of 
^.^2,201, 171. \0s. Of this the engrafted stock was subject to repayment 
by the company, the original capital of d^l ,200,000 could only be repaid 
by the State. 

It has already been shown that, from the middle of September 1697 
till the end of the year, the price of the stock (now fully paid) fluctuated 
between 98 and 86f . The first dividend, on the increased capital, was 
paid on December 25th. It amounted to 4 per cent., representing half 
a year's payment of the interest received from the government. The 
price of the stock on December 22nd was 89, and the quotations, in the 
flrst fortnight of the following January, 86 1 and 86 are accounted for 
by the stock being ex dividend. The revelations, as to the forgeries of 
Exchequer Bills early in 1698, kept the price low, and there was the 
uncertainty concerning the future of the East India trade. So, in the 
first quarter of the year, the extreme fluctuations were between 86 and 
89J, the most frequent prices being from 86J to 86|^. Evidently the 
news of the foundation of the New East India company was favourably 
received in the stock market, for from the end of April, Bank stock was 
over 90. With the exception of two occasions, the one on May 4th 
when the price was 95, and the other on July 6th when it was 94, 
quotations from the end of April to July 13th remained between 91 and 
92J. By the middle of July, it became known that a fairly favourable 
dividend might be expected in September and that a commencement 
would be made in paying off* the engrafted stock, and the price rose to 
94^ on July 20th, to 96f on August 10th and finally to 97i on August 
24th. It remained at the latter point till September 7th, after which 
date the dividend was deducted. It may perhaps be noted that this 
quotation only differed fractionally from that recorded a year before. 
The dividend, paid in 1698, was a cautious one, and is chiefly remarkable 
as inaugurating the beginning of the return of their capital to those who 
had subscribed for the engrafted stock. It is true that the amount paid off 
was very small, only \Qs. 9^r7. per cent., but it marked the commencement 
of a process that was steadily continued. The dividend proper, ix, that 
made from profits, was £Q. ^s. 2^c/. per cent., and the two payments 
together made a total distribution of 7 per cent, to those who owned 
proportionate amounts of the original and engrafted stocks. 

As already noticed, the stock market in the seventeenth century had 
scarcely arrived at the stage of " discounting the dividend,^' and so, 
immediately the payment was made, the price suffered proportionately. 
Thus, on September 7th, Bank stock cum dividend of £1 was at 97^^, 
and on September 21st it was 96J. When quoted ex dividend in the 

Div. X. § 1] Rise in the Price of the Stock 1698-9 215 

following week, the price was 90. Throughout the remainder of the 
year the price advanced without a single reaction, until 103 was reached 
at the end of December, making a gain of 17 during the year, but of 
this 13 had been marked in the last four months. 

The whole of the year 1699 and the greater part of 1700 were very 
prosperous. The harvests were good, trade was flourishing, and, for the 
times, politics were not unsettled. These favourable circumstances were 
reflected in the price of Bank stock. It was first quoted in 1699 at 103, 
but during the rest of the month of January there was a slight relapse ; 
owing, as Luttrell says, to several persons having closed their accounts 
with the Banki. It is probably to this cause that the fall to lOlf on 
the 25th is to be attributed, that being the lowest price of the year. 
This relapse was only temporary, and by the end of February the 
quotation was steady at 104. The declaration of a half-yearly dividend 
of 4^ per cent., this time without any repayment of engrafted stock, 
i.e. exclusively from profits, was favourably received. From the middle 
of April till the end of June fluctuations were very slight, only from 
103| to 105^. By the middle of July the prospects of a second favourable 
half-yearly dividend, which was this time 5 per cent., making 9^ per 
cent, for the year, led to a fresh improvement in the market. For 
the three weeks from July 19th to August 2nd the price was 107, the 
next fortnight it rose to 108f , on August 23rd it was 109 J, the next 
week llOi, then for a fortnight 113 and finally on September 20th, 119. 
Afterwards there was a slight fall, but not equal to the deduction of the 
5 per cent, dividend paid on September 20th, and by November 10th 
the quotation was 118 and the market continued to record transactions 
between that price and 115 till the end of the year, closing in December 
at 117|^. The difference between the lowest and highest prices recorded 
in 1699 represents a gain of 17^, which compares with an increase of 17 
in the previous year. 

The first quotation in 1700 was 126; and the advance, that followed, 
was accelerated by the announcement not only of a half-yearly dividend 
of a very little more than 5 per cent, but also of a return of capital on 
the engrafted stock. The two distributions together amounted to 

1 Rogers, First Nine Years of the Bank of England, p. 93. Rogers says he caunot 
verify this statement of Luttrell's. The statement is that Bank stock fell 2 per 
cent, about January 19th. In Rogers' transcription of Houghton's quotations the 
price for January 20th is given as 102^, that of the previous week having been 103. 
But Houghton quotes prices of the Wednesday in the paper published on the Friday. 
Rogers gives the date of the paper as that of the quotation. Therefore the price 
printed by Rogers as of January 20th is really that of the 18th. Luttrell is right in 
recording the fall as on the 19th since Houghton on Wednesday 25th quotes the 
price as lOlf. All through I have given the actual date of the quotation, not that 
of the publication of the paper. 


216 The Bank of England [div. x. § 

5\ per cent.^ The effect of this announcement was to cause the price 
to advance to 148 J. This was the highest quotation in 1700, and it 
was not surpassed till 1717. With this price of 148^ the progressive 
improvement, that had begun in 1697, culminated. It represents an 
advance of nearly 200 per cent, on the lowest price of 1697 (51). If the 
par for the new subscription be taken at about £Q5 in cash, the appre- 
ciation, shown in less than three years, would be 127 per cent. In view 
of these facts it can easily be credited that one of the directors. Sir 
Gilbert Heathcote, is reported to have made =^60,000^. 

The deduction of the March dividend of 1700 accounts for the 
reduction of the price of the stock from 148^ cum dividend to 142 ex 
dividend on April 24th. The ill-health of the King of Spain and the 
foreign complications, likely to arise in reference to the succession after 
his death, tended to depress the price of stocks. From May 1st to May 
22nd that of the Bank was quoted from 138J to 139. Between May 29th 
and June 12th it varied from 141 to 141^. In the next seven weeks 
quotations tended downwards from 138^^ to 136|^. By August 7th it 
was expected that the September dividend would be a favourable one, 
and the stock rose to 141|, relapsing to 138| on August 21st and re- 
covering to 142 in the next fortnight. This dividend included a fraction 
over 5 per cent, from profits and very nearly J per cent, return of 
principal on account of the engrafted stock, making a total distribution 
of B\ per cent.^, and a payment for the year of lOJ per cent. The fall 
in price from 148^^ in March to 142 in September, although the dividend 
was higher on the latter occasion, represents the discounting by the 
market of the outlook in foreign politics. After the books were re- 
opened, the price was 133, representing a fall of about 3 allowing for 
the deduction of the dividend from the price. Three weeks later the 
quotation was 129, and Houghton repeats this figure for the following 
ten weeks. It is probable that he did not change his quotations, as it 
is to be expected that the news of the death of the King of Spain on 
November 1st would have made some change in the price, according as 
this event had been over or under discounted. About Christmas Day two 
transactions at 124 J were recorded, this being the lowest price of the year. 

^ The dividend was 

The principal returned 

Total distribution 

2 Francis, History of the Bank of England, 

3 I.e. Dividend from profits 

Principal returned 

Total distribution 

£ s. d. 

... 5 0| 

4 llf 


£5 5 

I. p. 80. 

£ s. d. 
... 5 Of 
9 111 

,, ... 

£5 10 

Div. X. § 1] Price of Stock 1700— Crisis of 1701 217 

Throughout the first fourteen weeks of 1701, Houghton prints the 
same price, 123. Now this period was a very exciting one in the annals 
of the Bank. Thorold Rogers says that he is unable to reconcile the 
discrepancy between Houghton's list at this time and the prices mentioned 
by Luttrell, unless on the supposition that the latter records time bargains 
and the former "bonafde purchases and sales \'' Rogers was misled by 
the impression he formed that Houghton quotes only actual cash trans- 
actions. But a closer study of his list affords material for correcting 
this theory. The prices of stocks and shares in the Colled iofi.s' were 
compiled in different ways at different times-. In 1701, the notation 
adopted was to print the quotation with a small figure beside itl The 
index in this case was 0, meaning that there were no transactions, or in 
other words that 123 was bid, but that no business resulted. It is quite 
inconceivable that for three months the same offer was made without 
effect or without the price bid being modified. Evidently what 
happened is familiar to anyone who consults stock -exchange quotations 
in the less careful provincial newspapers. The price for Bank stock 
was reprinted from the previous issue for a lengthened period, as was the 
case with that of the other stocks. For instance the quotation of Old 
East India stock remained at 119 (marked as having been twice recorded) 
up to February 19th, when it apparently fell abruptly to 76. 

This lapse of attention on the part of the editor of the Collcctiom is 
to be regretted the more, since the first weeks of 1701 were the most 
exciting since the issue of the engrafted stock. The East India com- 
panies were in the throes of the struggle that resulted in the union begun 
in 1703. The Bank supported the New Company, and the Old Company, 
in its campaign, determined to injure the credit of its rival by attacking 
that of the Bank of England. The court of the Old Company, assisted 
by Duncombe, collected as much cash as they could together, it is said, 
but this is improbable, to the amount of a million sterling. They then 
obtained some i^300,000 worth of Bank bills. The object of these 
manoeuvres was to drain the City of specie, and then to demand payment 
of the bank-notes with the expectation that the Bank could not honour 
its obligations. This scheme failed and the Bank is said to have delivered 
a counter-attack which forced the banker of the Old East India company 
to suspend payment^. 

1 Rogers^ First Nine Years of the Bank oj England, p. 132. 

2 For specimens of these see Plate, vol. i. 

2 The price on Jan. 1, 1701, was printed 123 q. 

* The Villany of Stock Jobbers Detected [by Daniel Defoe], in A Collection of the 
Writings of the Author of the True Born Englishman, 1703, pp. 259-61 ; of The 
Consolidator: or Memoirs of Sundry Transactions in the World of the Moon, 1705, 
pp. 250, 251. The name of the banker who failed is given as ^VilIiam Slieppard, 
of. A Handbook of London Bankers, by F. G. Hilton Price, London, 1890-1, p. 151. 
Vide supra, ii. pp. 153-76, 183-8. 

218 The Banh of England [div. x. § 1 

The effect of this brisk financial campaign and the progress of the 
war, in which France was engaged with the German Empire, is reflected 
in the quotations recorded by Luttrell for Bank stock. On January 4th 
he records 122 and by the end of the month the price had fallen to 113. 
The attempted run on the Bank took place early in February, and by the 
1st of the month the quotation had fallen to 106, a week later there was 
a recovery to 110 and by March 6th the stock, according to Luttrell, was 
as low as 97. This reaction of about 26 in less than three months shows 
that in addition to the dread of war, the sentiment of the , market was 
influenced by the necessity, to which the Bank was reduced, of issuing 
sealed bills at 6 per cent, interest. This a contemporary writer describes 
" as a begging of credit^,*" and it probably made the situation appear 
worse than it was. Though the Bank must have suffered from the attack 
made on it, the payment of a dividend in March of 4| per cent, would 
not have been made, had it been severely shaken. By April 9th, 
according to Houghton, the stock was quoted at 103^ and Luttrell gives 
a price of 110 on the 17th. On May 7th 111 J is recorded by Houghton, 
but the next week and on till June 25th the quotation was 106. On July 
2nd the price rose to 112^. Afterwards there was again a reaction, and 
the stock only fetched 108 J in the middle of August. On the 20th the 
quotation was once more 112 J and, on the announcement of a second 
half-yearly dividend of 4J per cent., making 9 per cent, for the year, it 
rose to 115 J and subsequently to 118| on September 10th. After the 
books were re-opened in October, the first quotation was 109^, and the 
price fell away to 107 J, afterwards rising to \\^\ during the last three 
weeks of the year, thus reducing the fall for 1701 to 12 J on Houghton's 

Although it was known at the beginning of 1702 that war was 
inevitable, the market for Bank stock was stronger. It opened at 114| 
and maintained this level till the end of the first fortnight in January. 
From the 14th to the 21st there was a slight fall to 113i, this being the 
lowest price of the year. The March dividend was 4| per cent., an im- 
provement of \ per cent, on that paid in the corresponding half-year of 
1701. This raised the price of the stock which was quoted from 117 to 
118 from the end of February to the middle of March. Although war 
against France had been declared on May 15th, by the 27th the quotation 
had recovered the deduction of the dividend, and the price was again 
117^. The announcement that 5 per cent, would be repaid, on account 
of the engrafted stock on June 24th, increased the quotation to 121| on 
the 21st. After this distribution had been made the stock, ex dividend, 
was 118i till the end of July. In August the expectation of another 

^ The Villany of Stock Jobbers detected, ut supra, p. 261. 

Div. X. § 1] Repayments of Engrafted Stock 1702-3 219 

substantial repayment of capital caused the price to fluctuate between 
121 J and 125 J, the latter being recorded on September 9th. The 
dividend was again 4f per cent., making 9J per cent, for the year, with 
a repayment of 2^ per cent, of the engrafted stock, or a total repayment 
in 1702 of 7i per cent. Since only something less than f per cent, had 
been returned in 1700, the repayment of 1702 was much the largest yet 
made, and the stock was very steady during the remainder of the year 
reaching 129 on December 9th, and closing at the end of the month 
at 128f . 

In 1703, although the country was at war, the price of the stock 
went steadily up from January 20th when it was 126, after being 129 
on the 6th. The reason for this apparently anomalous movement was 
the large repayment of the engrafted capital made in this year. With 
the March dividend of 4f per cent., 2| per cent, of the capital was 
returned. On July 13th an extra payment of 2 J per cent, was made, 
and another of 4 J per cent, with the September dividend. So that in all 
9^ per cent, was returned, in addition to the dividend of the same 
amount, making a total distribution of 19 per cent. The progressive 
improvement in the quotations is explained by these repayments. At the 
March dividend-payment the stock was quoted at 129, by June 16th 
the deduction of the dividend had been recovered and the price was 
129f. The news of the additional repayment in July raised the stock 
to 133i, and that in September to 138|. 

It is not altogether easy to account for the fact that prices of Bank 
stock advanced in spite of the declaration of war and the death of the 
King, and maintained that advance. It may indeed be thought that, as 
often happens, these unfavourable circumstances had already been dis- 
counted and that the actual outbreak of hostilities would naturally bring 
the necessary reaction. This may have been so, but if Houghton's 
prices can be relied on — it has been shown they are subject to doubt on 
at least one occasion — the state of the market does not suggest move- 
ments dominated by the rebound from undue pessimism. Had this 
been so, the improvement would have been checked from time to time 
by frequent relapses. But on the contrary, it began in 1701, and it 
may with more reason be assigned to the large repayments of the en- 
grafted stock in 1702 and 1703. Even the small sum distributed as the 
beginning of this process in 1700 appears to have been one of several 
favourable influences in that year. 

This however only removes the problem one stage farther back. Why 
should these distributions, amounting in all to d£^409,132. 14?. 2d, have 
had such a marked effect.? The answer would appear to be twofold. 
On the one side stockholders may have had to strain their resources to 
pay for the engrafted stock, and the repayment of over 40 per cent, of it 


220 The Banh of England [div. x. 

came as a great relief to maily. Not only was it a relief, but the repay- 
ment was made in cash and represented a handsome profit. Even 
already, when about 40 per cent, of the stock was repaid, the subscribers 
had received back about two -thirds of the average amount of the capital 
they had raised. In the second place, the fact that the government was 
able to redeem the tallies showed that its credit was good, and therefore 
the expectation was formed that the financing of this war would not be 
nearly so difficult as that of the previous one. 

In the year 1704 the good fortune, enjoyed by the Bank since the 
middle of 1701, ceased, and until 1707 the institution had to battle with 
adverse circumstances. In November 1703 a most destructive storm had 
visited the English Channel and southern coasts and had destroyed much 
valuable property. On the 5th of January Bank stock was quoted at 128 J 
and it rose till March 6th when 133| was recorded. In view of the fact 
that the court found it necessary to reduce the dividend from profits from 
4f per cent, (which had been paid regularly for four half-years) to 4J per 
cent., with a return of 3 per cent, capital, this price represents a higher 
yield with the reduced dividend. In the next three months the fluctua- 
tions were not large, varying between 125 and 130. After the middle 
of August the stock rose, on expectations of a satisfactory September 
dividend, to between 131 and 130. This time the profits were lower, 
and only 4J per cent, was paid, making 8f per cent, for the year (as 
against 9^ in 1703) with a return of 4 per cent, on account of the 
engrafted stock. The dividend proved disappointing, and the stock was 
quoted "without the dividend" on September 22nd at 120 J — the previous 
price {cum dividend) having been 128^^ — or a fall of about 4. For the 
next month the quotations showed little change, varying between 121 
and 120. On October 27th there was a fall to 117^ and on the 30th to 
115. This fall on October 30th was due to bad news from abroad and 
aff'ected most of the better known stocks. Besides the securities of the 
Bank, those of the Old East India company, the African company and 
the Million bank, all touched the lowest quotations of the year on that 
day. The French armies had now occupied Spain and invaded Germany, 
while an insurrection in Hungary threatened to withdraw some of the 
troops that were badly needed by the Allies. The fall in stocks had been 
considerable, and there were large demands for cash from the Bank. To 
meet these, it became necessary again to issue interest-bearing bills, and 
the managing committee of the East India trade raised a considerable 
sum on bond. By these measures, a crisis that might have become 
serious was averted, and the total fall in Bank stock was about \S\ from 
the highest point of the year to the lowest. Early in November the 
stock recovered to 118, but relapsed to 116 J on the 29th, improving 
again to 117:^ on December 15th and to 119 J on the 20th, closing at 

Div. X. § 1] Reduced Dividends 1704-5 221 

119, thus reducing the fall on the whole year— taking the difference 
between the highest price and that last quoted in December— 
to 14^. 

It often happens that the after-results of a crisis are more disastrous 
than the crisis itself. So it proved during 1705 to the holders of Bank 
stock. The losses to commerce during the war, the shock to credit at 
the end of 1704 began to exert an influence in checking business, and the 
profits available for distribution were smaller than usual, so that the 
dividend in March had to be again reduced, on this occasion to SJ per 
cent. Prior to the declaration of the dividend the stock was fairly 
steady, though on the whole it tended to fall. The price was 120 J on 
January 3rd and it was below 120 by the 8th. From the 8th to the 
22nd it stood at 119-119|. Between January 24th and February 2nd, 
quotations receded from 118 to 114^. Then there came an improve- 
ment and 116 was reached by the end of the month. The dividend of 
3J per cent., as against 4J per cent, in the corresponding half-year, 
proved disappointing, and the first price after the books were opened 
was only 108 on March 21st. On the 23rd 104^ was recorded, 102 on 
the 26th and 98 on the 28th, a fall of 10 in a week. During April and 
May there was a slight recovery, the fluctuations being between 102 and 
100. In June the stock again lost ground. It was 100 J on the 1st and 
fell steadily to 92 on the 29th. The market steadied itself in July 
(although in this month most other companies touched the lowest point 
in the year), the price being 95 on the 4th and 95^ on the 30th, after 
having fallen to 93J on the 20th. During August there was evidently 
an expectation that the September dividend would be some improvement 
on that declared in the previous March, and 97 J was quoted on the 22nd, 
this being followed by 97 on the 31st and 96i on September 5th. The 
Bank however could do no more than repeat the 3|^ per cent, dividend 
making 7 per cent, for the year, as against 8f paid in the previous year. 
Some compensation may have been found in the return of £^. \0s. per 
cent, capital, making with £5 repaid in March 8^ per cent, for 1705 (as 
against £1 in 1704) ; still the payment of a dividend of one per cent, 
less than the interest received by the Bank from the government suggested 
the inference that a loss had been made in the banking business; or that, 
if profits had been made that could not be divided, the institution must 
be sorely pressed for funds. Such ideas are reflected in the course of the 
market for the stock during the next four months. Early in September 
the price had been 96^ ; after the dividend had been paid, it was from 
88 to 89, showing a fall of nearly 5, allowing for the deduction of the 
dividend. These quotations were unchanged throughout October and 
until the middle of November. By November 16th the stock had 
improved to 90, only to fall back to 88^ at the end of the month, and 

222 The BmiTc of E^igland [div. x. § 1 

to 87 on December Btli (this being the lowest price of the year) recovering 
to 89J on the 28th. 

During the year 1706 similar causes continued to affect adversely the 
business of the Bank. It is true that until the middle of March 
quotations moved but little — between 88^ on January 18th and 91 on 
February 26th, the latter price being the highest of the year." Once 
more the half-yearly dividend was less than expected, namely 3 J per 
cent, with a repayment of 7 per cent, on account of the engrafted stock. 
During the months of April, May, June and July the market was 
sluggish, the extreme variations in the four months having been only 
between 83 and 85. Towards the end of August in previous years there 
had been animated transactions in view of the dividend announcement. 
For three half-years speculators had been disappointed and in 1 706 the 
quotation only rose f to 85f. After the dividend of 3 J per cent., or 
7 per cent, for the year, with a repayment of 4 J per cent, (being 11 J 
per cent, for the year on the latter account) was paid, there was another 
serious fall in the stock. When the books were re-opened it stood at 
77i on September 25th, rising to 78J early in October, and falling back 
to 78 on the 4th, then to 77 on the 16th and finally to 76^ on the 18th, 
about which it remained till the end of the month. This was the lov/est 
point of the year — the lowest too since 1697, and represents a fall of 14f 
from the highest price in 1706 and of no less than 72 from that of nine 
years before. This may possibly have been the occasion referred to by 
the author of the Anatomy of Exchange Alley when he asks, " who were 
the men, who in the late hurry of an expected invasion, sunk the price 
of stock 14 or 15 per cent. ? Who were the men that made a run on the 
Bank of England, and pusht at them with some particular pique too, if 
possible, to have run them down, and brought 'em to a stop of payment? 
...Will they tell us that running upon the Bank and lowering the stocks 
was no treason.^. . .Is not a wilful running down the publick credit, at a time 
when the nation is threatened with an invasion from abroad and rebellion 
at home ? Is not this adding to the terror of the people ^P" During this 
period, and for the next few years, rumours of invasions and Jacobite 
plots formed the usual basis for a " bear-raid"*"* on stocks. It is probable 
that the passage quoted above refers rather to the French expedition of 
1708 ; but, whatever was the cause, the depression of Bank stock shows 
that the effect was serious. The Union was being debated in Scotland, 
and it soon appeared that there was a strong party against the measure. 
Riots were frequent towards the end of October 1706, and it may have 
been thought in London that the Jacobite faction in Scotland would 
take advantage of this state of feeling, and that there might be an 

1 Reprinted in Francis^ Chronicles of the Stock Exchange, p. 872. 

Div. X. § 1] The Depression of 1706 223 

insurrection, assisted by French troops. The reason that an invasion, in 
the interests of the exiled family, was dreaded was not only on account of 
the evils of a civil war, but because it was believed that it was the policy 
of the Pretender to repudiate the existing National Debt\ Therefore 
any such rumour would have a most serious influence on the stock- 

Whatever was the cause of the low price of Bank stock in October and 
November 1706, it is evident that the situation was considered most 
alarming, and it is noteworthy that the stock of the Million bank suftered 
similarly : whereas the prices of the India companies'* shares had been 
lowest in January and were much higher at the end of the year. The 
severity of the crisis, experienced by the market in Bank stock, may be 
judged by the fact that authentic news in December was sufficiently 
depressing, yet from the 10th the price was 84 or over, marking a recovery 
of £S from the lowest point in October. It is true that a public 
thanksgiving for the victories of the army was held in December, but 
the situation in Scotland was for a short time very serious. There were 
numerous riots, and orders were issued, it was said, to troops in England 
and Ireland to be ready to sail, and these if necessary were to be supple- 
mented by drafts from Flanders^. 

In January 1707, as it became known that the Union would be 
passed without alteration or delay by the English Parliament, prices 
of securities were first steady, at a low level, and then began to 
improve. Bank stock stood early in the month at 84 and, after 
small variations, closed at the same price. By the 7th of February 
the price relapsed to 81|, partly as a result of a meeting of the court on 
the 5th at which it had been decided to advance the government 
d^l ,200,000 at 5 per cent, on the extension of the charter for twelve 
years, partly by renewed fears of an invasion^. A rival proposal was 
submitted by a gi*oup of private bankers to circulate J'l ,500,000 
Exchequer Bills at 5 per cent.; and, the Bank having offered to 
take 4J per cent, on the same conditions, its offer was accepted on 
February 14th^ On the following Monday, the 17th, the stock rose 

1 The Fears and Sentiments of all True Britons with respect to National Credit, 
1710, p. 8 ; The Spectator, No. 3. This is the import of the sponge in the hand of 
the Pretender in the " Vision of National Credit" ; An Essay towards the History of the 
last Ministry and Parliament: containing seasonable Refections on Favourites, Ministers 
of State and Puhlick Credit, 1710, in Somers' Tracts (1748), ii. p. 266 ; A Letter to 
a New Member of the Honourable House of Commons; touching the Rise of all the 
Embezzlements of the Kingdoius Treasure, 1710, in Harleian Miscellany (1746), vi. 
p. 288. 

2 Luttrell, Brief Relation of State Affairs, vi. pp. 95, 108, 110, 119; Burnet, 
History, \. p. 291. 

3 Luttrell, Brief Relation of State Affairs, vi. p. 136. * Ibid., vi. p. 139. 

224 The Bank of England [div. x. § 1 . 

to 92, after being 82f the previous week. The March dividend was™ 
£%, Ws. \\\d. per cent., with a return of 3<y. OJdf. per cent, on account 
of the repayment of capital, making a distribution of 3f per cent. This 
was the last transaction on account of the engrafted stock, and, when 
the 3^. OJd had been distributed in July, this additional stock, which 
had been retained in the books at its original amount (although subject 
to repayment by instalments), was finally cancelled, thus restoring the 
capital to the original sum of .£'1,200,000. The market for the stock 
was favourable in March, April and June. By the end of April the 
price had returned to par — the first time this quotation was recorded 
since June 6th, 1705. It remained over 100 till the middle of May, 
but during the following two months there was a slight reaction and 
quotations were between 97 and 98 J. 

By July the calls required from the proprietors to circulate the 
Exchequer Bills, authorized in February, had been received in part on 
the new capital created for that purpose in the previous March. The 
amount to be added to the stock was decided by the following method. 
The capital had been .£2,201,171. \^s. from 1697 up to the repayment 
of the last of the engrafted stock in March 1707. This operation 
reduced the capital to the original amount of ^1,200,000, but at 
the same time the court made a call of 50 per cent, on the whole 
amount, both original and engrafted stock, which would have realized 
d^l ,100,585. 15,9., had not the Bank returned the proprietors 
^99,414. 5,9., leaving the balance of the call ^1,001,171. 10^. This 
added to the original capital of .^g'l ,200,000 made the total new capital 
.£'2,201,171. 10^. 

As the operation was slightly intricate, the following tabular state- 
ment shows how it was effected : 

The Capital re-arrangement of 1707. 

£ s. d. 

Capital from 1697 to 1707 2,201,17110 

Deduct engrafted stock, cancelled March 1707 ... 1,001,171 10 

Total capital after cancellation of engrafted stock £1,200,000 

£ s. d. 
Call of 50% on £2,201,171. IO5. =1,100,585 15 
Less amount divided out to pro- 
prietors 99,414 5 

Nett amount added to capital by 

the call £1,001,17110 1,001,17110 

Total capital after March 1707 £2,201,171 10 

The effect of the whole operation was that, although the capital 
was unchanged, over a million of it, which was now repaid, and which 
at March 1707 had only £2,^25 of cash against it (owing to the 

Div. X. § 1] The Capital increased 1707 225 

previous repayments of engrafted stock), was now once more represented 
by subscriptions from proprietors on which calls were being made. 

This substitution of a real, for a nominal capital was one element 
in the strengthening of the credit of the Bank during 1707. The 
circulation of Exchequer Bills, by its agency, added to its claims on 
the State; and, as arising out of this, it had been entrusted with the 
remittance of the "Equivalent money" to Edinburgh^ The Union 
between England and Scotland had now begun to work with less friction, 
and some merchants were of opinion that the French might sue for 
peace. These considerations had a favourable effect on the stock- 
markets. Towards the end of April, as already mentioned. Bank stock 
had reached par and by the end of June it was 97^. On the news that 
on July 18th the Old East India company would submit the outstanding 
disputes with the English company to the arbitration of Godolphin, 
there was a general rise, not only in the securities of these undertakings, 
but also in that of the Bank, the latter reaching 108 J on July 28th. 
In August the stock rose from 109J to lllj. The September dividend 
was favourable, being 4 per cent., thus showing an increase of \ per cent. 
on that paid in the last four half-years ending September 1706, and 
making £1. Ws. \\\d. per cent, for 1707. By October 3rd the price of 
the stock had advanced to 119, the highest in the year and a rise from 
the previous October of no less than 43| or over 56 per cent. In the 
remaining months of the year the price fell slightly, touching 113f 
on November 19th, after which it recovered to 117 at the end of 
December. The causes of this depression are to be found in the loss 
of Sir Cloudesley ShoveFs fleet at the end of October, the proclama- 
tion for a general fast on the 17th of November and the resolution of 
the House of Commons to impose a land-tax of 4^. in the £^. 

It is unfortunate that the Daily Courant (from which most of the 
previous prices have been taken) ceased to print quotations for the year 
1708, and there are few to be found outside the issues of the Flying 
Post. Transactions are recorded from the beginning of March to the 
end of July, but there are none during the very interesting period when 
there was considerable alarm in P'ebruary as to a possible invasion by 
the French^. Whether there was any material fall in prices cannot be 
known (unless quotations for these months should be discovered). The 

1 Part of this remittance was made in bills, which occasioned discontent in Scot- 
landj vide infra, Division x., Section 3. 

2 Luttrell, Brief Relation of State Affairs, vi. pp. 228, 235, 236. 

3 Ibid., VI. p. 269; An Account of the Late Scots Invasion as it was opened by my 
Lord Haversham, in the House of Lords on 2oth February, 170|. In A History of 
Agriculture and Prices in England, by J. E. T. Rogers, vii. p. 711; two quotations 
(ll7i, 117i) are given in February 1708. 

S. C. HI. 

226 The Bank of England [div. x. § 1 

first price recorded is on March 8th, 1708, which was practically th^" 
same as that at the end of December, being 117J. Although it was 
believed on March 12th that the French fleet had not sailed in a 
northerly direction, news was received, by the middle of the month, 
that it was off the east coast of Scotland, and troops were hurriedly sent 
to the norths By March 24th Bank stock was at 111 J, and Luttrell 
states, on March 16th, that it had been announced in the House of 
Commons that the prices of stocks, which had fallen considerably, had 
now improved^. There had been material losses in the securities of the 
East India companies, the Old Company's stock having fallen 6 in a 
fortnight and that of the New Company 13|^ in the same time. This 
may have been the occasion mentioned by the writer of the Anatomy 
of Exchange Alley previously quoted^. Parliament took notice of the 
depression of the stock-exchange and resolved on March 20th that 
"whosoever designedly endeavoured to destroy or lessen the public 
credit, especially at a time when the kingdom was threatened with an 
invasion, was guilty of a high crime and misdemeanour, and an enemy 
to her Majesty and the Kingdom'*." By the end of the month, news 
had been received from Scotland that the hostile fleet had sailed home- 
wards, and that it was judged safe for the troops brought from Holland 
to return there ^ By the middle of April, Bank stock had risen to 
128, an improvement of over 16 J in less than three weeks. This was 
attributable partly to the certainty of the suppression of the insurrection 
in Scotland, partly to a slight increase in the dividend, which was 4| per 
cent., as against £^. Ws. \\\d. per cent, in the corresponding half-year. 
Quotations were very steady in May and June and on till the end of 
July. It might be expected that the September dividend of 8^ per cent., 
making 12| per cent, for the year, would have led to an advance in the 
price. If this were so, any gain made must have been lost before 
the end of the year, since the first transaction recorded in 1709, on 
January 28th, was at 118, or a fall of 9| from the previous July. The 
causes for the reaction were twofold. The battle of Oudenarde had 
been fought in July 1708, and the arrival of news of the victory had 
had a favourable influence on the stock-market. Afterwards the war, 
though favouring the Allies on the whole, had not advanced so rapidly 
as many had expected. Then the government was applying to the 
Bank for a fresh loan of large amount. Previous experience may have 
suggested that the issue would be raised by creating new stock at par ; 
and, in view of such a possibility, the price was apparently too high. 

^ Luttrell, Brief Relation of State Affairs, vi. pp. 279-83. 
^ Ihid., VI. p. 279. 3 Vide supra, p. 222. 

* Journals of the House of Commons, xv. p. 621. 
^ Luttrell, Brief Relation of State Affairs ^ vi. p. 283, 


Div. X. § 1] The Capital doubled 1709 227 

Early in the year 1709 the proprietors debated very closely the proposed 
loan and increase of capital, and it eventually became necessary to 
adjourn the meeting^ On February 5th, 1709, the company decided 
to ofFer to lend the government dg'400,000 free of interest, or in other 
words by adding this to the original capital (which had been borrowed 
at 8 per cent.) the government would owe the Bank ^1,600,000, on 
which the interest would remain =£'96,000 a year, so that the effect of 
the change was to reduce the rate of interest from 8 per cent, to 6 per 
cent. The Bank was to be given till August 11th, 1711, to pay this 
amount of .^400,000, and a discount of 6 per cent, was to be allowed 
on all or any part of the loan paid to the Exchequer before that date. 
The whole amount was paid by September 3rd, 1709, and the Bank 
received a total discount of ^£^46,512. 16^. 8^.^ It was also proposed 
that the Bank should circulate .^2,500,000 of new Exchequer Bills. It 
was agreed that the capital necessary should be provided by the doubling 
of the existing stock, i.e. by issuing .£2,201,171. 10,y. at 115, making 
the total capital £'4,402,348, and realizing at the proposed premium 
£^2,531,347. 4^. Qd. on the new subscription. This proposal was dis- 
cussed in the House of Commons on February 10th, and it appears that 
pressure was put on the Bank to circulate an additional half-million of 
Exchequer Bills ^. The proprietors met, and decided to adhere to their 
original proposals ^ The Act 7 Anne cap. 7 accepted the offer of the 
Bank, and postponed the date of redemption until one year's notice had 
been given after August 1st, 1732. On Tuesday, February 22nd, the 
subscription lists for the new capital were opened at the office of the 
Bank in Mercers' Hall at 9 o'clock, and the whole amount was taken up 
by 1 o'clock, " indeed such was the crowd of people that brought their 
money to that fund, that near one million more could have been sub- 
scribed that day I" The price of the stock at the time of the subscription 
was about 117, and this included a right to the dividend to be declared, 
which turned out to be 4|^ per cent., or an increase of ^ per cent, on the 
corresponding half-year of 1708. After the transfer books were re- 
opened, the quotation touched 115i, the lowest recorded price of the 
year, on April 1st. Information of the progress of peace negotiations 
soon affected the stock-market, and several securities reached the highest 
prices of the year in the fortnight between May 24th and June 7th, 
Bank stock rising to 135 or a gain of 19^ in two months. Although 
the negotiations were broken off, the distribution of a bonus of 7^- per 

1 Luttrell, Brief Relation of State Affairs, vi. p. 403. 

2 Earlier Years of the Funded Debt, ut supra, p. 68. 

2 Journals of the House of Commons, xvi. pp. 100, 101. 
* Luttrell, Brief Relation of State Affairs, vi. p. 40G. 

^ Ibid., VI. p. 410 ; Chandler, Proceedings of the House of Commons, iv. p. 117, note. 


228 The Bank of England [div. x. § 1 

cent, in July was favourably interpreted, especially as this was followed 
by a further dividend of 4 per cent, in September, being 16 per cent, for 
the year. The first quotations, after the payment of the September 
dividend, seem low, namely 120, 119J on October 21st; but, in com- 
paring these with those current in June, it is to be remembered that the 
latter included prospects of a bonus and dividend together amounting 
to 11^ per cent., which had since been paid. So that, in spite of the 
news of the victory of Malplaquet which had been received in London 
in September, the price of the stock ex dividend was slightly lower. 
During November quotations remained about 120 to 121, but in 
December there was a reaction to 115|^, occasioned chiefly by the 
Sacheverell prosecution, partly by another issue of stock in order to 
support the circulation of a further sum of <^400,000 in Exchequer 
Bills. The total amount of stock subscribed was ,^656,204. 1^. 9<i., 
which, added to the existing capital of ^^4,402,343, made a total of 
^£^5,058,547. \s. ^d. This issue was made by offering each of the pro- 
prietors the option of increasing his holding by 15 per cent., payable as 
to £B on December 29th, £5 on the 25th of January, £B on 25th of 
February, subject to a discount of 9 per cent., if paid on or before 
December 29th in cash or Exchequer Bills\ Offers of 2i premium were 
made for "liberties on the call of 15 per cent.," this being equivalent 
to the difference between the issue-price of the new, and the market 
price of the old stock 2. 

In January 1710 the price of Bank stock opened lower than it had 
been in the previous year. On the 4th it was 112 and on the 6th lllf . 
On the 9th a rise began which continued till February 17th when 129| 
was quoted, that being the highest point of the year. This advance was 
due to the report that Louis XIV. had signed the preliminaries of 
peace^. The stock remained between 126|^ and 128 till March 3rd. 
By the 14th it had relapsed to 123^, but recovered to 127f on the 
27th. The deduction of the March dividend, this time of 4 per cent, 
on the increased capital, accounts for the quotation about 123 to 123| 
from April 14th to May 3rd. On May 5th the price fell to 121f , but 
advanced to 124 on the 24th, and stood near that figure till June 9th. 
Afterwards a steady fall set in, which with one or two recoveries con- 
tinued to November 1st. By the end of June the quotation was 118f , 

1 Luttrell, Brief Relation of State Affairs, vi. p. 522. 

2 The Post-Boy, December 19, 1709, i.e. at this rate the premium payable oi 
the allotment of £100 new stock would be £15, the price of the existing stocj 
being 116|. 

3 Luttrell, Brief Relation of State Affairs, vi. pp. 546, 547. This rise in pric 
was arrested by the Sacheverell Riots early in March^ during which the offices 
the Bank were threatened by the mob. 

Div. X. § 1] The Depression of 1710 229 

during the first week of July it improved a little to between 11 9| and 
119^. On the 11th, Anne had an attack of gout, and it soon became 
known that the French plenipotentiaries had been dismissed, while 
Jacobite medals were being freely distributed in England and Scotland ^ 
In view of these disquieting circumstances, Bank stock fell to 113^ on 
July 14th, and to 112J at the end of the month. In August the political 
situation at home occasioned uneasiness; and, upon the dismissal of 
Godolphin on August 8th, the quotation was 108^^^ closing at 107^ at 
the end of the months During the first fortnight in September, the 
stock advanced to between 113 and 114^ on the publication of favour- 
able war-news from Spain. This half-year the dividend was 3J per 
cent., making 7^ for the year. In October came the turmoil of the 
elections. The dismissal of the Whig ministry caused apprehensions 
that the Tories would be enabled to favour the Jacobites, again there 
were rumours of an invasion, and there was another run on the Bank. 
The stock had been 111 ex dividend at the end of September, and it 
had fallen to 105 on October 13th, on the necessity of the issue of 
sealed bills at 6 per cent, interest^. By November 1st it had further 
fallen to 95f , not only the lowest quotation in 1710 but the lowest since 
1707. During the remainder of the year there was some recovery, and 
105:^ is recorded on December 1st, but for most of the time the stock 
was only a little over par. 

The interest on Exchequer Bills had fallen into arrear, and in 1710 
it was agreed that such arrears, as well as certain other Bills for the 
quarterly allowance (issued at 4^ per cent, in 1709), should be added to 
the million and a half of bills which the Bank had agreed to circulate, 
making in all ^1,775,027. 17*. 10^(7., and that the bills should be 
cancelled, by adding this sum to the permanent debt of the State, due 
to the Bank, at 6 per cent, interest. The debt, owing to the Bank, thus 
became ^3,375,027. 17*. lOd.^ To enable this operation to be carried 
out a fresh issue of capital was made pro rata, this time of 10 per cent. 
The amount received (some proprietors not paying in full) came to 
d^501,448. 12*. lid; which, added to the existing capital, made 
^^5,559,995. 14*. 8d, at which it remained till after 17^ 

In the first days of 1711 there was a further fall in Bank stock 
on the receipt of intelligence of the reverses at Brihuega and Villa 

1 Luttrell, Brief Relation of State Affairs, vi. pp. 604-8; A Detection of the Court 
and State of England, by Roger Coke, 1719, m. p. 412. 

2 A History of the Reign of Queen Anne, by J. H. Burton, iii. p. 65 ; Sojne 
Reasons offered by the late Ministry, 1715, p. 55. 

3 The author of An Essay towards the History of the last Ministry (Somers Tracts, 
II. p. 269) gives the fall at this time as from 123^ to 107. 

* Luttrell, Brief Relation of State Affairs, vi. p. 640. 
5 Earlier Years of the Funded Debt, ut supra, pp. 69, 70. 

230 The Bank of England [div. x. § 1 

Viciosa. On January 3rd tlie price was lOlJ, but it had recovered to 
103 on the 12th. After being about 103 till near the end of February, 
it rose to 104 on the 26th and to 106 on March 16th. After deducting 
the dividend of 3 J per cent., the stock was at 102^ on March 26th. 
From April 11th to May 4th, the fluctuations were between 102 and 
lOOJ, the latter being the lowest price of the year. The market then 
improved slightly until 106f was recorded on June 11th, and it then fell 
back again to 100 J on August 30th. Considering that a crisis had just 
been experienced, the steadiness of the market is worthy of note, for 
during eight months the extreme variations did not exceed 6J. 

There were two favourable influences in September. One was the 
passing of the act, incorporating the holders of certain debts as the 
South Sea company, which was followed by the signature of a charter^ 
By this means certain pressing charges, as well as arrears of interest, 
were funded, and it was considered at the time that this operation 
exercised an important influence towards restoring credit. The second 
indication of the coming of better times was the signing of eight 
preliminary articles of peace on September 28th 2. The effect of 
these events was a rise in Bank stock which was quoted at ri4f eoe 
dividend on October 5th. The prospects of peace and the arrangement 
of the debt were evidently welcomed by investors, for the publication of 
the dismissal of Marlborough, on December 31st, failed to aff'ect the 
prices of stocks. Bank stock for instance, which had fallen a little in 
November, remained about 109 during December, and maintained this 
price till the middle of the following January. There was a slight 
relapse on the 21st to 108^ ; but, by the end of the month, the quota- 
tion had recovered to 110^. In February 1712 the market was steady, 
and prices tended to rise. By the end of the month the stock stood at 
112^, about which price it remained till the end of March ^ or, allowing 
for the deduction of the dividend, until the 4th of April. This dividend 
was 4 per cent, and was therefore an advance of ^ per cent, on that paid 
in each of the three previous half-years. That the court thought it 
wise to make an increased distribution was favourably received, and the 
stock rose to 111 on April 11th, and this price was maintained till 
May 15th when there was a fresh rise to 115J. Except for a small 
reaction in June, quotations were from 112 to 116 until the middle 
of October — allowing for the fact that the September dividend of 4 per 
cent, was deducted from the price on the 19th. Early in November the 

^ Vide infra, Division x., Section 5. 

2 The History of England during the Reign of Queen Anne, by Earl Stanhope, 
1889, II. p. 228. 

3 The Flying Post gives a quotation of 125 for March 6, 1712. This is no 
doubt a misprint as the other papers record 112^ for the same day. 

Div. X. § 1] Favourable Influences 1711-13 231 

quotation was again about 115, rising to 116 at the end of the month. 
December brought intelligence of the probability of the peace negotia- 
tions being concluded, and Bank stock rose from 116 J on December 2nd 
to 123 J on the 30th. 

The condition of the Bank during the year 1713 is of no great 
interest. The Peace of Utrecht was actually concluded in March, but 
(as shown by the price of the stock) the effect of this had been dis- 
counted in the previous December. By the Act 12 Anne cap. 11 the 
Bank was authorized to circulate ^^1,200,000 Exchequer Bills, and to 
enlarge its capital for this purpose, if necessary. The state of business 
only justified the repetition of the same dividend, paid the previous year, 
namely 8 per cent. Although peace had been concluded, the outlook 
was uncertain, owing to the ill-health of Queen Anne and the doubts 
that existed as to the succession. This alarming possibility, as well as 
the large debt incurred during the war, induced a feeling of nervousness, 
which prevented the benefit of the cessation of the war from effecting an 
immediate improvement in credit. 

These facts and expectations are reflected in the price of Bank stock. 
It was quoted on January 2nd, 1713, at 122J, but had fallen to 119^ on 
the 9th. During the remainder of the month the fluctuations were 
between these two quotations. The market was stronger in February, 
and by March 6th 125 is recorded. After a slight reaction, the same 
price was repeated early in April, reaching 127 on the 8th. On the 
17th, after the revelations made in the report of the Commissioners of 
Public Accounts (which had been presented the previous day) showing 
the large losses sustained by the Treasury in various ways^, the price 
fell to 123|-123i. Until the end of May, there were no more than 
fractional changes. On June 5th the stock was at 124^^, rising to 127 
towards the end of the month. On the news that Anne was unable to 
attend the public thanksgiving on the declaration of peace, which was 
held at St PauFs on July 7th, there was only a very small decline, and 
on the 31st the quotation was again 127. In August and the earlier 
part of September there was a continuous rise until 130 J was recorded 
on September 10th, the highest price of the year. In October the stock, 
now ex dividend, was between 124^ and 123, and there was no change 
in November. During December the quotation advanced a little, 125| 
being recorded at the end of the month. 

The month of January 1714 is memorable through an organized 
attempt to produce a fall in stocks by the circulation of a report that 
Queen Anne had died suddenly. Rumours to influence prices had been 

1 The Report of the Commissioners for Taking, Examining and Stating the Publick 
Accounts of the Kingdom with the Examinations and Depositions relating thereunto, 


^32 The Bank of England [div. x. § 1 

known long before, and what differentiates this one is the effectiveness of 
the stage-management. One day towards the end of January a well- 
dressed man, having all the appearance of a person of importance, rode 
furiously down the Queen's Road, shouting that the Queen was dead. It 
was known that she had been ill, and the news was accepted without 
suspicion \ Business was suspended, and preparations were made for 
a general mourning. What made the news so alarming was its unex- 
pectedness. For some time past there had been intrigues as to the 
succession, and as yet neither party was prepared. Therefore a time of 
political confusion was to be expected, and the gravest national dangers 
were anticipated. Persons, who had capital, wished to have a part of 
their resources immediately available, and withdrawals from the Bank 
began. These in a short time developed into a run, which attained 
almost to the dimensions of a panic. East India stock had been 126 in 
December, South Sea stock 94 J, and on January 29th the former was 
118J: and the latter 85f . On the same day Bank stock was quoted at 
120 J, a fall of nearly 5 in a month. The relapse continued (although 
the Queen wrote to the Lord Mayor on February 1st announcing her 
recovery 2) until April 2nd, when the quotation was 116f , the lowest 
price of the year^ By the end of the month the stock had risen to 
120|-121, and by the beginning of July to 123. For some days 
afterwards the price was between 122 and 123. Then came the last 
illness of Anne, who was seized with an apoplectic fit early on the 
morning of the 30th. On the following day it was reported that she 
was dead, and stocks rose three per cent. This was quoted as being 
" infamous^," but the real reason of the rise was the appointment of the 
Duke of Shrewsbury as Lord Treasurer, which implied that the plots of 
the Jacobites would be checked. When the official news of the Queen's 
death was announced on August 1st, the rise in Bank stock continued. 
It was quoted at 130 on August 6th, and rose to 134 on September 10th. 
Allowing for the deduction of the dividend, this price was maintained 
till the end of the first fortnight in October. It might at first sight 
appear one of the vagaries of finance that a false report of the death of 
Anne should cause a short panic, whereas the event itself was accompanied 
by a rise in stocks. The true explanation has already been indicated. 
The report of January found the supporters of the Protestant succession 
unprepared, whereas in July and August they were ready. The peaceful 
proclamation of George I. accounts for the steadiness of the market at 

1 Chronicles and Characters oftha Stock Exchange, by John Francis^ 1849, p. 47. 

2 Malion, History of England, i. p. 59. 

2 Anderson (Annals of Commerce, in. p. 278) gives the fall as from 126 to 116, 
as against one from 125f to 116| in the prices mentioned in the newspapers. 
* Swift, Works (Faulkner's edition, 1767), xiv. p. 361. 

Div. X. § 1] Death of Anne and the Rehellion 1714-15 233 

the advanced quotations. Reports of the activity of the Jacobites, 
towards the end of October and early in November, depressed prices, 
Bank stock falling to 126f on November 6th, after which day it rose 
slowly and closed at 129 in December. 

The victory of the Whigs at the elections, early in 1715, was favour- 
ably received by the stock-market, as making for settled government, 
and by February 11th Bank stock had risen to 134^, the highest price 
of the year. The March dividend was this time 3f per cent, or a reduc- 
tion of \ per cent, on those paid in each of the six previous half-years. 
The lower dividend did not materially affect quotations, for the price 
remained over 130 till the end of May. The report of the Secret 
Committee on June 9th caused a very slight fall, which was recovered bv 
the 24th. For the first three weeks in July, the price fluctuated from 
132 to 131f , but on the 27th there was a fall to 126^, occasioned by 
anticipations of a rebellion which had been forecasted in the King's 
speech on the 20th. During the next fortnight prices continued low, 
from 126 to 127J, but rose by the 15th of August to 133. For the 
following month, i.e. from August 15th to September 13th the fluctua- 
tions were from 131 to 133. Then came a rapid fall on the news that 
the Earl of Mar had raised the Pretender's standard at Kirkmichael on 
September 6th. On September 21st Bank stock had been 129, it was 
124 on the 22nd and 123 on the 23rd ex dividend, recovering to 126^ on 
the 28th, and being quoted at 125J on the 30th. On October 9th the 
price had risen to 127^, afterwards it fell rapidly, giving way to 115 on 
November 11th. This was the lowest quotation of the year, and it con- 
stitutes an interesting comment on the financial state of the country that 
this price is very little lower than that of the crisis of 1714, thereby 
showing that a serious shock to credit was considered as menacing as 
a civil war. 

The news of the defeat of the Jacobite army at Preston (which took 
place on November 11th) led to an immediate rise in the price of stocks. 
Bank stock had been 117 J on November 14th and it touched 119 the 
same day, rising further to 120 on the 15th, by the 20th it was 124 J, an 
improvement of 7 in six days. For the next three weeks it fluctuated 
from 123 to 124 J ; and, on favourable news of the prospects of the 
suppression of the Rebellion, there was a sustained rise from the middle 
of December to the end of the month, when the price was 127^ on 
the 30th. 

In the first week of January 1716 the quotation was as high as 128 ; 
then, when it became known that the Pretender had landed in Scotland, 
there was a reaction to 126^; and, owing to the disappointment occa- 
sioned by the apparent supineness of the army in the North, the price 
fell to 123| on the 26th. Early in February it became known that the 

234 The Bank of England [div. x. § 

Jacobite army had retreated from Perth ; and, on the 6th, the quotation 
had risen to 128^. After falling, the stock was again at 128 on the 
12th ; and, upon intelligence being received, that the Pretender had 
re-embarked on the 4th (which was announced in the House of Commons 
on the 16th), the price continued to rise, reaching 130 J at the end 
of the month. After a temporary fall to 127^, the quotation recovered 
again, and remained steady at about 130, until the closing of the books 
on March 16th. The stock, ex dividend of 4 per cent., was quoted at 
128-1281 on March 22nd, a rise of over 2, and it advanced till 134 
was recorded on June 1st. The Rebellion was now over, and the quota- 
tion of Bank stock was almost the same as that ruling a year before. 
On May 31st, 1715, it was 132, and on June 1st, 1716, 134. The lowest 
price in 1715 showed a fall of close on 20, all of which had been 
recovered by the end of June 1716. 

After the Rebellion, the outlook was more favourable for the general 
business of the country than it had been since 1703. The succession 
was settled, there was peace at home and abroad, and a ministry was in 
office that was expected to be more favourable to the monied interest 
than that in power during the closing years of the reign of Anne. 
Owing to these circumstances, a great rise began in Bank stock which 
continued, with a few interruptions, until 1718. The price was 134J in 
July 1716 — a rise of 11| since the beginning of the year — and by the 
end of the month it was 137. At the end of September 140 was 
recorded, and 148 on October 13th, the highest quotation of the year. 
In the next week there was a sharp fall, owing to the friction between 
George I. and Lord Townsend, the stock reacting to 141 on the 24th 
and to 135 on November 30th, a total fall of ^^13 in six weeks^ During 
December there was an improvement and the price closed for the year 
1716 at 137i. 

In January 1717 Bank stock fluctuated between 137| and 139 J, 
closing at the latter price. The information of a Jacobite plot, in 
which the Swedish minister was implicated, gave some uneasiness to 
business men; and, during the end of February, Bank stock was from 
135| to 138. When Parliament opened on February 20th, the King's 
speech had made allusion to the necessity for " reducing by degrees the 
insupportable weight of the national debt."*' There had been many 
schemes for lessening the indebtedness of the nation, some of them of 
a confiscatory nature, and the proposal was so badly received that a 

^ In Mahon, History of England (i. p. 252)^ it is suggested that contemporary 
writers exaggerated the nervousness in the City at the fall of Townsend, and it is 
said that the total fall in stocks was not more than one per cent. But from the 
beginning of the strained relations of King and Minister the fall was 11 per cent, 
in Bank stock. 

Div. X. § 1] Improved Prospects 1716-17 235 

loan of =^600,000 at 4 per cent, had not been subscribed in full. On 
March 5th a resolution was moved " effectually to make good all parlia- 
mentary engagements.'' There was some discussion as to the attitude of 
the Bank; and, while several members recognized the services it had 
rendered, Aislabie, then Secretary of the Navy, charged the directors 
with being ready to support the late ministry \ All the chief public 
stocks, such as those of the Bank of England, the East India, South Sea, 
and Million bank companies were seriously affected by the dread of the 
forecasted changes. As holding loans to the government, they had to 
face the possibility of a reduction in the interest they received ; and, in 
the case of the Bank, there was the possibility that its present capital 
might be swamped by the addition to it of a large number of debts ; for, 
it was by the subscription of the annuities, debentures &c. into the stock 
of a trading company, that Walpole proposed to effect the reduction of 
the interest charge payable by the State. The discussion of this plan of 
finance belongs rather to the history of the South Sea company^, which 
put it into practice in a manner that led to unfortunate results ; but, for 
the understanding of the situation in March 1717, it may be mentioned 
at the present stage, that to make it desirable for the holders of loans 
to convert them into stock of a company and for the government to 
authorize such conversion, it was necessary that the company should 
receive less interest for the loans it would take over than had been paid 
previously to the individual bondholders, and that the deficiency in 
income, thereby likely to be experienced by owners of government stocks, 
should be made good by the profits earned by the company in its trading 
capacity. But this aspect of the question leaves out of sight the interests 
of the shareholders in the company on which stock was to be engrafted. 
If the undertaking were in want of additional capital (which could be 
raised by borrowing on the security of the increased government debt), 
the increased profits from an enlarged capital might maintain the old 
rate of dividend on the new capital. If, on the other hand, the present 
resources were ample, the trading profits would in the future be dis- 
tributed over a larger share-capital, with the consequence that the 
original stockholders would suffer. In the latter case, a certain body of 
persons, engaged in a business undertaking, would be taxed to lessen the 
general charge on the nation at large. 

The stockholders in the Bank considered that their present capital 
was ample, and therefore the effect of Walpole's scheme would have been 
to diminish the value of the existing stock. This attitude of mind was 
reflected by the course of quotations. The price of Bank stock had been 
139 at the end of January and it had fallen as low as 131 J on March 8th, 

1 Chandler, History of the House of Commons , vi. p. 112. 

2 Vide infra, Division x., Section 6. 

236 The Bank of England [div. x. § 1 

on the same day all other stbcks (except that of the African company, 
which was unaffected by the scheme) reached the lowest points of the 
year. East India stock, for instance, in the same period fell 12, and 
South Sea stock 9J. In view of these facts, the fall of Walpole in April 
caused an immediate revival of confidence, and, by the end of May, the 
loss in the price of Bank stock had been recovered. By July 5th the 
quotation stood at 148, thus repeating that current in the previous 
October. The rise, which had been interrupted from November 1716 to 
March 1717, was now resumed, 155 J being recorded on July 17th. In 
August, September, October and on till the middle of December, the 
price was lower owing to the war which had broken out between Spain 
and Germany, for it was feared that Britain would be involved in the 
struggle, owing to the obligations imposed by existing treaties. On 
December 13th Bank stock had been 148f ; but, on more favourable 
foreign news and the attention paid by Parliament to the scarcity of 
silver coins (which was a great impediment to business at the time), the 
stock, which had been 152 on December 20th, rose to 157 J on the 30th, 
that being the highest price of the year and a rise of 26 since the 
previous March. For the first quarter in 1718 the price continued to 
improve, until 161f was recorded on March 8th. This was the highest 
quotation both of 1718 and also in the series of years since 1710-11. 
The passage in the King's message, delivered to the House of Commons 
on March 17th, which, after alluding to the negotiations " of the utmost 
concern " then in progress, asked for an increase in the Navy, showed 
that the country was gradually drifting towards war with Spain, and an 
immediate fall in stocks was one effect of the message. Bank stock had 
been 161f on the 8th and by the 21st it had fallen to 152. Allowing 
for the deduction of a 4 per cent, half-yearly dividend, the price remained 
steady till the beginning of June ; and, on the sailing of Byng's fleet for 
the Mediterranean, there was a further small relapse. In July the stock 
rose a little, and on August 15th 152f was recorded. News of the 
victory, gained by Admiral Byng against the Spanish fleet at Passaro, 
off the coast of Sicily, on August 11th, was received with mixed feelings. 
While a British success was gratifying, the collision with Spain had made 
war inevitable ; and, towards the end of August, Bank stock was falling, 
and it was quoted at 148 J on September 3rd, a loss of 4 J within three 
weeks. The seizure of the goods of English merchants in Spain caused 
great disquietude, and by October 9th, Bank stock had fallen to 140, 
the lowest price of the year. The formal declaration of war with Spain 
was made on December 17th ; but, in view of the events of the summer, 
this had been fully discounted, and the price of the stock (which had 
been 145|^ on December 5th) rose to 151 J on the 22nd and to 154^ on 
the 29th, so that although the country was at war, the price at the end 

Div. X. § 1] A Time of Prosperity 1718-19 237 

of the year was only slightly lower than it had been in the previous 

In January and February 1719, considering that the country was at 
war, the fluctuations in Bank stock were not large. With the exception 
of one week from January 9th to 16th, when the quotation was as low 
as 152f , the price varied between 155 and 158, the latter figure (which 
was the highest of the year) being recorded on February 13th. On the 
27th of February the stock was 157. In March the Pretender was 
received publicly in Spain, and it began to be feared that a Spanish fleet, 
which had been collected for some unknown purpose, was designed to 
convoy transports for an invasion of the British Isles. On March 10th, 
George I. announced in the House of Lords that these anticipations were 
well founded, and between March 4th and March 13th Bank stock fell 
no less than 14 — from 156 J on the former, to 142^ on the latter day. 
As showing the excitement of the time business was done between 145 
and 142^ on the 25th. After the first shock of the news, it was 
recognized that the danger had been exaggerated, and the author of 
the Anatomy of Exchange Alley, writing in the following April, was in 
doubt "whether it was ever worth our being so much alarmed, as 
we have been in Exchange Alley \" This projected invasion depended 
for its success on taking Britain by surprise, and it was already fore- 
doomed to miscarry once the country was prepared. The storm that 
dispersed the fleet completed the failure and relieved the anxiety in the 
City. Up to April 10th Bank stock gradually rose to 146J ; then, on 
the news that two ships of the expedition had succeeded in landing 
troops at Kintail in Ross-shire on the 16th, there was a fresh reaction to 
143f on the 29th. The futile nature of this disturbance was soon 
recognized, and in May the stock rose from 145 to 147J. This improve- 
ment continued till July 10th, when 154 was recorded, a gain of 11^^ in 
less than four months. There was a slight reaction in the middle of the 
month, and the quotation on the 29th was 152^. Early in August 
there was a sharp fall, but this was apparent rather than real and was 
occasioned by the deduction of a bonus of 10 per cent, paid in July out 
of capital. This distribution did not affect either the nominal amount 
of stock or the sum credited as paid up. The former remained at 
^5,559,995. 14*. 8^. and the latter at £100 nominal. The capital thus 
returned was restored in part in 1722 and the remainder in 1744 2. In 
July the stock had sold between 153f and 152J, and on August 7th it 
was quoted, ex bonus, at 142^ to 143— the difference being almost 
exactly accounted for by the bonus being deducted from the earlier price. 
During the rest of the month of August quotations advanced, 149 being 

1 Francis^ Chronicles of the Stock E.vchange, p. 382. 

2 Earlier Years of the Funded Debt, ut supra, p. 71. 

238 The Bank of England [div. 

recorded on the 28th and again on September 9th. A week later there 
was a fall to 147, and this price was repeated (allowing for the fact that 
the stock was ex dividend after September 23rd) until October 23rd. 
On the 30th the price touched 140^, the lowest point of the year. The 
attitude of the stock-markets in the second half of November and the 
month of December is of great interest. It soon became known to a 
favoured few that the South Sea company had a scheme in view that 
would give great advantages to the proprietors ; and those who were 
acquainted with the actual proposals, which were discussed in December 
and had probably been matured earlier, were engaged in a speculative 
purchase of stock. The original form of the scheme was designed to 
amalgamate the Bank of England and the South Sea company, and 
gradually orders were placed on the market for the purchase of the stock 
of both companies. The result was a steady rise in the last eight weeks 
of 1719. Bank stock advanced from 140^ to 149f or a rise of 9J, 
and South Sea stock during the same period from 116f to 127 J — a 
rise of 10 J. 

In the fatal year 1720 Bank stock rose till January 29th, when 
153 was recorded, a gain of 2f since the beginning of the year and 
during the same time South Sea stock was almost stationary. The 
suggestion had been made that the benefit of the proposed conversion 
should be divided between the two companies, and this being rejected 
by the court of the South Sea company, the process described "as setting 
the nation up to auction*" began ^ The tale of the contest for the 
monopoly of the conversion belongs rather to the history of the 
South Sea company, and the proceedings of the Bank may be seen more 
clearly in relation to the rival proposals of the younger company. On 
February 1st, the matter was to be decided by the House of Commons, 
and in the forenoon the stocks of the two undertakings fluctuated 
violently. Bank stock, which had been 153 on January 29th, varied on 
the eventful Tuesday from 156 to 147J, South Sea stock from 129 
to 137 J. The difference was that the latter closed strong and the 
former weak. Evidently the decision of the House of Commons had 
been forecasted with a fair degree of accuracy. As showing that the 
excitement was confined to these two stocks, it may be mentioned that, 
while they each fluctuated more than 8 points on the same day, the 
quotations of East India stock only varied by J. There was a debate 
in the evening, and Walpole defended the Bank, but Aislabie, now 
Chancellor of the Exchequer, who owned South Sea stock (for which he 
found it difficult to account a year later), was able to convince a House, 
which had reasons for wishing to be convinced, that the offer of the 

1 Timberland, Proceedings of the House of Lords j iii. p. 176. 

Div. X. § 1] The Speculation of 1720 239 

South Sea company was more favourable, and it was resolved that this 
should be accepted^. The consequence was an immediate rise in the 
stock of the South Sea company, and a fall in that of the Bank. The 
latter declined to 145^ on February 3rd, but rose to 149-152 on 
the 5th. Until the closing of the books on March 2nd, the price 
varied between 147^ and 154 J, closing at 150, so that the fluctuations 
of the month from February 5th to March 3rd were not as great as 
those of February 1st. After the books were re-opened, the stock was 
quoted at 15^ on March 18th, then came the excitement from the 
21st to the 23rd, when the stock-market was greatly disturbed— South 
Sea stock fluctuating between 270 and 380 on the 23rd, while Bank 
stock was from 160 to 175 on the 21st. This great advance could only 
be maintained temporarily, for the shares in the Bank had no great 
speculative possibilities; and, as the tide of gambling began to be 
directed towards South Sea stock, that of the Bank was sold and the 
price fell from 175 on March 21st to 139 on April 22nd. 

From the end of April the South Sea company began to lend money 
on the security of its stock, and the Bank followed this dangerous 
example. The effect of such facilities for speculation was soon apparent. 
Between April 22nd and May 21st Bank stock rose from 139 to 210, an 
advance of 71, and South Sea stock from 343 to 460, an advance of no 
less than 117 in a month. During the next five weeks the directors of 
the Bank began to see the danger of the situation, and they appear to 
have exerted their influence to check the excessive speculation in Bank 
stock. It is true that on Friday, June 24th, the stocks both of the 
Bank and of the South Sea company reached the highest prices of the 
year (that of the latter indeed was much higher than it had been before 
the inflation), but during the five weeks Bank stock had risen from 
205-210 on May 22nd to 265 on June 24th, a total gain of 60; 
whereas, in the same period. South Sea stock had been inflated from 
between 420 and 460 to 1050, or an advance of 600 in the five weeks, 
representing a profit of six times the par value of the stock in this short 
space of time^. 

While the price of South Sea stock was crumbling away at the end 
of August and during the month of September that of Bank stock was 
comparatively steady. From the highest quotation of the year — 265 on 
June 24th — it had fallen to 210 (at which it had stood previously at 
the end of May) by September 9th. Between the 9th and 26th this 
price was recorded six times, and it is instructive to compare the wild 
fluctuations of South Sea stock during the same eighteen days. On the 

^ Chandler, Proceedings of the House of Commons, vi. 213. 

2 The variations in the price of the stock are shown in the diagram of the 
maximum daily fluctuations from May to September at the end of this volume. 


240 The Bank of England [div. x. § 

9th it varied between 575 ai:id 650, on the 14th from 555 to 590, on the 
19th from 440 to 380, on the 21st from 350 to 395, on the 26th from 
360 to 300. Thus although Bank stock had been sold within these 
eighteen days at prices showing a difference of 65^ the same price occurs 
at the beginning and the end of the period, whereas in the same time 
South Sea stock had fallen no less than 350 or over 50 per cent. 

Until October 7th Bank stock remained about 200, and a little con- 
sideration must have shown that the price was much too high. The 
dividend for the year had been 7 J per cent., and thus the yield was about 
3f per cent. Further there were no prospects pointing to future great 
developments. On the contrary, other bankers were failing daily. At 
any moment the Bank of England might find itself seriously involved, 
and the fact that it survived the panic is an enduring tribute to the 
prudence and tact of the directors of the institution, which, amidst the 
ruin of this fatal year, was to the sorely stricken mercantile community 
" like the Capitol to old Rome^"' In addition to the losses through 
failures of private bankers there was also the prospect that the Bank, 
after having been slighted by the ministry of 1720, would be called upon 
to make some sacrifices to aid in restoring credit. Taking these facts 
and contingencies into account, it will be apparent that the price of the 
stock at the end of September could not be maintained. 

One reason for the strength of Bank stock was the influence of 
what was known as " the Bank-contract."' This was drawn up early in 
September and provided that the Bank should take South Sea stock at 
400, in payment of a sum of <^3,775,025. 17^. \0d. of redeemable debt 
held by the Bank 2. Now as long as South Sea stock was over 400 (as it 
was till September 7th) it would be apparently to the advantage of the 
Bank to complete the bargain. On till the 22nd, with the exception of 
one or two transactions. South Sea stock remained at 400 or over it. 
Then came the suspension of payment by the bankers of the company — 
the Sword Blade banking partnership^ — on the 24th — and South Sea 
stock, which had touched 400 on Friday 23rd, was as low as 300 on 
Monday the 26th. Quite apart from the effect of the failure of the 
Sword Blade bank in reducing the price of South Sea stock, it affected 
the Bank of England in forcing it to collect its resources in view of the 
extra demands now made upon it, and therefore the directors refused to 
complete the agreement. Aislabie charged the Bank with breach of 

1 Considerations on the Present State of the Nation, as to Publick Credit, Stocks, 
the Landed and Trading Interests, London^ 1720, p. 17- 

^ Journals of the House of Commons, xix, pp. 319, 320 ; Francis, History of the 
Bank of England, i. 135 ; Anderson, Annals of Commerce, iii. p. 351 ; Proceedings 
of the House of Lords, in. p. 181. 

3 Vide infra. Division xn.. Section 3 c. 

Div. X. § 1] The Panic of September 1720 241 

faiths and there appears to be little doubt that an agreement was made 
which only required to be formally completed. It is difficult to say 
what information the governor and directors had before them, when 
they withdrew from the understanding arrived at. From the point of 
view of commercial morality, a mere fall in South Sea stock below the 
400, mentioned in the proposals, would have been no excuse for the 
Bank's withdrawal. The failure of the Sword Blade company meant 
that, if the Bank of England had attempted to complete the agreement, 
it would also have been involved in the collapse, with most serious 
effects on the national credit which was already severely shaken. Besides, 
whether the directors were aware of it or not, the mala fides was in 
reality on the side of the South Sea company. As shown by the 
" Report of the Committee of Secrecy^" in the following year, huge dis- 
bursements had been made for illegal or dishonourable purposes, and 
therefore the actual financial condition of the undertaking was much 
worse than it appeared. Possibly some inkling of these facts may have 
reached the court of the Bank, so that, on grounds of fair dealing and 
expediency alike, the directors were justified in refusing to complete the 
agreement, and they thereby saved the country from a much greater 
extension of the panic. 

The reflection of the refusal of the Bank to support the South Sea 
company on the prices of the stocks of both was very marked. That of 
the latter had been 400 on September 23rd, and by the 29th it was only 
200. It is true there was a recovery to 290 on October 3rd, but this 
was followed by a fresh fall to 200 on October 12th. Bank stock 
fluctuated between 200 and 180 during the first week of October, and 
on the 12th it fell from 170 to 140, touching 130 on the 14th, thus 
recording a loss of no less than 70 in a fortnight. This was the lowest 
price of the year, and it shows the resistance of the credit of the Bank 
to the shock of the panic that the lowest point is no more than 9 below 
a quotation recorded in the previous April before the South Sea inflation 
had commenced. During the remainder of the year, the stock on the 
whole improved. There was a sustained rise up to November 12th, 
when 152 was recorded, an advance of 22 in less than a month, and 

* " I was thoroughly satisfied that this agreement of the Bank was a legal and 
firm bargain, and I can't yet imagine with what face of justice or equity they could 
ever break through it..." Proceedings of the House of Lords, iii. p. 181. He further 
stated " if what I have heard since be true and what they say has been publickly 
avowed that this bargain was never intended to be kept, then I say it was not only 
a useful secret to those that were in it but the most compleat stratagem of tlie 
whole YQ?iT"—Mr Aislabies Second Speech on his Defence in the House of Lords, on 
Thursday, July 20, 1721, pp. 18, 19. 

2 The several Reports of the Committee of Secrecy, to the Honourable Home of 
Commons, relating to the South-Sea Directors, S^c, London, 1721, pp. 11-23. 
s. c. III. 1^ 

242 The Bank of England [div. x. § 1 

a price very closely approaching the average of the previous Januai^ 
and February. Throughout the remainder of November the stock was 
between 150 and 140. In December it fell as low as 132 on the 14th, 
recovering however to 147-148 on the 30th ; this compares with 150 J 
on January 1st, 1720 ; so that, after a year of exceptional strain that 
closed in the break up of credit following a severe panic, the difference 
in the price of Bank stock was no more than 3. 

To complete the account of the Bank of England to the end of the 
year 1720, it only remains to notice the effect on its capitalization of 
the relief given the South Sea company in 1722. By the Act 8 George I. 
c. 21 the latter company was authorized to sell, and the Bank to buy 
og'4,000,000 of South Sea stock at 105. The Bank thus increased its 
loan to the government by ^£^4,000,000, and it paid for such increase 
.^4,200,000— the difference of ^200,000 representing the premium. To 
raise the necessary capital, the court decided to issue .^3,400,000 
stock at 118, which realized d£^4,012,000\ Therefore adding the stock 
issued in 1722 to that already in existence — namely =£^3,400,000 to 
^£'5,559,995. 14^. 8d— the total became <£^8,959,995. 14.9. M. : and the 
debt due by the State at the same period was c£9,375,027. 17.?. lOd, the 
interest on which, together with the charge for management, amounted 
to J'490,649. \ls. Sd. annually. The government debt was soon in- 
creased, but the total stock remained unchanged till 1742. 

^ A portion of the premium of this issue was devoted to repaying to the capital 
account part of the bonus drawn from it in 1719^ vide Earlier Years of the Funded 
Debt, p. 71. 

Div. X. § 1] Capital 1694-1722 243 

Summary of Capital, Dividends and Prices of the Stock, 1694-1722. 


8. d. 

1694. Loan to the State, of which 60% was paid by the sub- 
scribers in 1694, 20% in 1696-7, and 20 7„ provided 
from the profits ° 1,200,000 

1697. Subscription taken in tallies and bank-notes (engrafted 

stock) 1,001,171 10 

Total stock 1697 2,201,171 10 

From 1698 to 1707 the engrafted stock was repaid, and, 
on the completion of such repayment, the stock was 
cancelled, — deduct 1,001,171 10 

Total stock 1707, after deduction of amount of 

engrafted stock 1,200,000 

1707-8. A call of 60% on the capital as 
between 1698 and 1707 was made, 
i.e. 50% of £2,201,171. 10*.= £1,100,585 15 
The Bank at the same time divided 

out to the proprietors 99,414 5 

Leaving the net increase of stock ...£1,001,17110 

Total (being the same as from 1698 to 1707) ... 

1708. The stock was doubled— £2,201,171. 10*. being sub- 

scribed at 115 

Total stock 1708 

1709. New stock was created to the extent of 15°/„ of 

£4,402,343, of which there was actually paid up ... 

Total stock 1709 

1710. New stock was created to the extent of 10% of 

£5,058,547, of which there was actually paid up ... 

Total stock 1710 5,559,995 14 8 

1722. In order to purchase £4,000,000 South Sea stock, 
£3,400,000 Bank stock was issued and subscribed 

atll8 3,400,000 

Total stock 1722 8,959,995 14 8 


1,001,171 10 

2,201,171 10 

2,201,171 10 


656,204 1 


5,058,547 1 


501,448 12 



Prices of the Stock and 



Date of highest 

Highest and lowest 

Date of lowest | 


Dec. 21 
Dec. 11—25 

16 prem.— par 
40 prem. — 14 prem. 

Sept. 21 
Jan. 2 



Jan. 8 
Sept. 15 

Dec. 14—28 
Sept. 27 

48 prem.— 7 disc. 
98— |62ii 


Dec. 9—23 
Feb. 3 

Jan. 12 
Jan. 25 


March 13-20 


Dec. 24 


.?Jan. 1 to April 2 
Dec. 9 

123— j 973 
129— 113J 

March 6 (Luttrell) 
April 9 (Houghton) 
Jan. 14 22 


Sept. 1—15 


Jan. 15—20 


Feb. 28 


Oct. 30 


Jan. 3 


Dec. 5 


Feb. 26 

91— 76i 

Oct. 18 to Nov. 1 


Oct. 3 


Feb. 7 


April 12 


March 24 


May 24 


April 1 


Feb. 17 

129^— 95| 

Nov. 1 


Oct. 5 

114|— 100| 

May 4, Aug. 30 


Dec. 30 


April 2 4 


Sept. 10 

130J— 119i 

Jan. 9 


Sept. 10 


April 2 


Feb. 11 


Nov. 11 


Oct. 14 


March 25 


Dec. 30 


March 4 


March 8 


Oct. 9 


Feb. 13 

158— 140$ 

Oct. 1, 6 


June 23, 24 


Oct. 14 


^ Bank-notes. 2 Cash. 

3 For reasons, explained in the text, Houghton's figures are subject to doubt, 
therefore the quotation from Luttrell is added. 

Dividends, 1694-1720. 

Distributions made on Bank Stock. 








from profits, 






from profits 



tion °/, 

£ *. d. 

£ s. d. 

£ s. d. 

£ 8. d. 










3 10 
20 01 


27 10 



6 3 2^ 

6 3 2\ 

16 9|... 

16 9| 



4 10 


9 10 



5 Oi 

4 llf 
9 11^... 

5 Of 

10 1 

14 11 



4 10 

4 10 




4 15 


4 15 

9 10 

2 10 ... 

7 10 



4 15 

2 15 
2 10 

4 15 

9 10 

4 5 ... 

9 10 



4 10 


4 5 

8 15 

4 0... 




3 10 


3 10 


3 10 ... 

8 10 



3 10 


3 10 


4 5 ... 

11 5 



3 11 11^ 

3 0^... 

3 Oi 


7 11 iH 



4 5 

8 5 

12 10 



4 10 
7 10 






3 10 

7 10 



3 10 

3 10 



















3 15 


7 15 



















3 10 

7 10 

10 02 




3 10 



7 10 

1 This 20 per cent, was utilized in lieu of the payment in cash by the proprietors 
of the last call, or, in other words, the last call was paid by a bonus out ot the 
reserved profits. ^ j ci. i 

2 This distribution, described as a bonus, was made from capital, and afterwards 


The Bank of Credit on Land Rents (founded by Hugh 
Chamberlain, 1695). 

The Land Bank, Established Anno Domini 1695 (founded 
BY John Asgill and Nicholas Barbon) ; The National 
Land Bank (founded by John Briscoe, 1695). Amalga- 

Bank of England. 

Once the building up of a credit system on a joint-stock basis had 
been begun, the differences of opinion, as to the nature of the foundation 
on which the whole edifice should rest, which had shown themselves 
prior to the incorporation of the Bank of England, were likely, in 
favourable circumstances, to produce attempts to issue notes on some 
security other than a metallic one. During the speculative activity from 
1690 there was a change of sentiment as to the different investments 
favoured from year to year. "Some years ago people were in warm 
pursuit after plate-wrecks, and, when that failed, the humour had 
recourse to stock-jobbing, and, notwithstanding the vast losses and 
disappointments therein, the whole nation and the legislative power 
thereof fell headlong from thence into lotteries and from that extremity 
we fell into another excess of banking\'''' The latter development was 
the opportunity of those promoters, who aimed at the founding of banks 
issuing notes secured on land and not on bullion. The most prominent 
leaders in this movement were Hugh Chamberlain, Nicholas Barbon, 
John Asgill and John Briscoe. Chamberlain was the earliest in the 
field, and his schemes were reproduced at a later date, after those of his 
rivals had been dropped. Thus he becomes connected with the histories 
of the Banks of England^ and of Scotland =* as a competitor of Paterson 
when the former was being established and, at a later date, as advocating 
a change in the Scottish currency, which would have affected the fortunes 
of the latter. 

When the banking system of Paterson was accepted by the govern- 
ment and granted legislative sanction, Chamberlain decided to prosecute 

^ Some Considerations on the late Act of the Parliament of Scotland for Constituting 
an Indian Company, London, 1695, p. 4 (Advocates' Library Pamphlets). 
2 Vide supra, p. 204. 3 yi^Q infra, Section 3. 

Div. X. § 2] BanTc of Credit on Land Rents 1695 247 

his own scheme, without any recognition from the State. Accordingly, 
when he found that the undertakings started by Barbon and Briscoe 
were receiving support, he brought forward his plan for a Bank of Credit 
on Land Rents. In October 1695 he published proposals offering those 
who would join him a treble option, which he described "as equivalent 
to a new discovered mine/' First, the owner of landed property might 
mortgage it to the office of land credit for 150 years, receiving for each 
£\60 rent per annum, so assigned, ^8,000 in the notes of the bank, 
paying for the accommodation only \ per cent, interest annually and 
repaying the principal at the rate of 1 per cent, a year for 100 years. In 
the second place, he might borrow the same sum and (what was virtually 
an identical proposal in another form), by paying IJ per cent, per 
annum, become free from all liability to return the principal. Thirdly 
he might sell his land outright at 80 years' purchase, receiving the 
purchase money in land credit notes \ The secret of the financing of the 
scheme depended on the payment being made in the obligations of the 
office, these would have only cost the sum paid for printing, and the 
small rate of interest was calculated to leave a substantial margin of 
profit after paying office expenses. In addition, it was intended that 
the bills should be employed in trade, and the gains resulting were to be 
added to the income of the bank 2. Chamberlain contemplated taking 
mortgages and making loans on rents up to ^50,000. The advances on 
this sum would have come to .^4,000,000, and even the small interest of 
J per cent, would have produced a gross income of <£'10,000. This was 
subject to the charges of management; but, on the other hand, there 
were the profits from trading on the credit of the notes to be added. 
Necessarily, account should have been taken of the inevitable depreciation 
of the notes and that, since these must have been accepted by the bank 
that had issued them, the imaginary profit would melt away. Chamber- 
lain himself was not blind to the hazardous nature of the operation he 
proposed, since he stated that the reason the notes were to be issued 
gradually was to prevent " a glut of credit," which was his euphemism 

' London Gazette, October 25, 1695, reprinted in Rogers' First Nine Years of 
the Bank of England, ut supra, pp. 53, 54. 

[8223 e 7~i 
Brit. Mus. ^-^ L P- 2. This phase of the 

scheme was only developed fully in the proposals made later in Scotland {vide infra, 
Section 3). The idea, at this time, seems to have been that the office issued the 
notes as a loan, these were gradually returned to it, as interest paid by the borrower. 
Such bills were to be employed in trade and gradually retired out of the profits 
so made— Pajoers relating to a Bank of Credit on Land Security, 1693 [Brit. Mus. 
1139 . h . 181. Elsewhere it is stated the notes were to be retired in equal numbers 

r„ . ^, 8223.6.71 
each year. The Constitution of the Office of Land Credit Brit. Mus. :^ J. 

248 Bank of Credit on Land Rents 1695 \jyjv. x. § 

for depreciation. Again he, is candid enough to admit that the whol 
transaction was " no more than what is duly practised by gamesters who 
engage their guineas to the box for 30 counters apiece which they then 
value as 1^. each^" The essential fallacies of the scheme were glossed— 
over by appealing to the suspicion of the " landed interest '' towards thefl 
" monied men.""* All objections were treated as so many efforts of the 
latter to prevent the former from borrowing, except on terms " which 
were not interest but extortion,"*' while Chamberlain represented his 
mission as " the freeing of our lands from the servitude and tyranny of a 
devouring usury ^^ 

The internal organization of the office of land credit was somewhat 
complex. The person, proposing to join it, " subscribed '" his property in 
the sense of leasing it for a long period or mortgaging it to the bank. 
He thereupon became a " Proprietor in the Office." There were also 
" the Noble Visitors,'' who acted as trustees, in whom the subscribed 
estates were vested, while there was a third rank or group, the 
" Undertakers or Managers." Each of these classes chose equal numbers, 
from its own body, to form " the Chamber of Control." Lastly, every 
proprietor had one vote, and no more, in the choice of "Governors 
of Trade" — the latter persons being those who were to manage the 
commercial operations supported by the credit of the notes ^ 

On November 29th, 1695, Chamberlain announced that a total 
rental of <i^50,000 had been subscribed ; and, at the request of those who 
could not be included, this sum was doubled, and, later, it was announced 
that loans were to be issued on a rental up to ^200,000 ^ Had this 
amount been deposited, it would have been necessary to create notes to 
the nominal value of more than ten millions ; and it was even proposed 
to issue twice that amount to lend to the governments 

A new phase of the scheme was announced on December 20th, 1695. 
It was said that applications had been received from land-owners, who 

^ The Several Articles or parts of the Proposals upon Land Credit Brit. Mus. 

8223. e. 7" ] 

4 J- 

[822 S e 7~1 
' L p. 4 ; cf. Several 

Assertions Proved in order to Create another species of Money than Gold and Silver 
[by John Asgill]. Reprint Econ. Tracts, Baltimore, p. 30. 

2 Constitution of the Office of Land Credit, ut supra, p. 8. Subscriptions were 
first taken at Chamberlain's house in Essex St., afterwards at Mr William White's 
chambers in the new building (No. 7), Lincoln's Inn. 

* Constitution of the Office of Land Credit, ut supra, p. 3. 

^ An Essay upon the Necessity of raising the value of twenty millions of pounds at 
least, in either bills, bonds, tickets or tallies of credit, according to Dr Chamberlain s 
method, in order to enable the King to carry on the war with France [Brit. Mus. 
1390. e.l]. 

Div. X. § 2] Bank of Credit on Land Rents 1696 249 

were ready to become members, provided their lands could be freed from 
existing encumbrances. It is evident that, at this early stage of the 
venture, mortgagors would not receive land credit notes, and therefore 
Chamberlain proposed a method by which these encumbrances could be 
met. He advertized that he was ready to receive subscriptions of cash 
up to ^50,000, which were repayable in four annual instalments with a 
bonus of 40 per cent.^ Or, according to a modification of this sub- 
scription, the subscriber might elect to receive his principal back again 
at the end of the four years ; and, instead of a bonus in cash, he could 
obtain credit for an additional 20 per cent, in credit-notes, which would 
be subscribed on his account into the projected trading stock 2. 

In spite of Chamberlain's promises and the hopes that he raised, the 
public was not sufficiently credulous to support his "office." Though 
many believed that " land was the best bottom for publick banks^" the 
schemes of Barbon and Briscoe, which were much less unsound than those 
of Chamberlain, were sufficient to meet their needs. It has been 
customary, when reference is made to the " land-bank '' of this period, to 
associate it wholly with the name of Chamberlain, though his promotion 
was in reality the extreme extravagance of the movement, not its natural 
outcome. Indeed one might almost imagine that his office of land credit 
was a parody of other promotions, but the venom with which he, as 
" the first proposer of land-banks," attacks rival schemes shows that the 
latter were gaining the support denied to him. His criticism of the 
other propositions begins moderately enough in a Bank Dialogue (1695) 
and becomes more acrimonious, till it ends in the tract entitled a Rod 
for a FooVs Back'^. 

The type of land bank promoted by Asgill and Barbon differs widely 
from the credit office. The former was in fact a prototype of the 
land-mortgage bank. Its constitution provided for the making of loans 
on landed property up to three-quarters of the actual cash value. The 
mechanism, by which it was proposed to record the loans, consisted of a 
treble series of books, one of which contained the market value ("the 
value of the auditor "), another three-quarters of that sum (" the value 
of the register "), and the third the remaining quarter (" the equity of 
redemption"). The amount lent must not exceed the value of the 
register, paid to the borrower in the form of " bills of charge," divided 
into denominations of ^1,000, £500, .^100, <^50, at an interest of 

1 London Gazette j Dec. 20, 1695. This advertisement makes the instalments 
equal ones. 

2 Proposals of JDr Hugh Chamberlain for a Bank to secure current credit, 1696 

r^ .^ -, 8223.6.71 ^ 
Brit. Mus. h P 3. 

2 An Essay upon Projects [by Daniel Defoe], 1697, p. 67. 

4 Brit. Mus. ^^^^-^-^ , 8227 . b . 7. 

250 The Land Banks 1695 [div. x. § 2 

3J per cent., if paid quarterly, or 4 per cent., if paid half-yearly. In 
order to give currency to these notes, a public subscription was made, 
and ^100,000 stock had been taken up by August 30th, 1695, on which 
20 per cent, was to be paid on or before October 19th. It was provided 
that the capital might be increased, until it amounted to ^£^500,000. 
Great care was taken, in the planning out of the office, to prevent fraud 
or careless management, while it was agreed that there should be 
established a fund for insurance of " the bills of charge," first by setting 
aside ^6^10,000 of the paid up capital and secondly by adding to that 
sum \ per cent, out of each 3 J per cent, or 4 per cent, received as 
interest on the loans. The members were entitled to two votes for =^^300 
stock, three votes for ^£"500, and five votes for ^^1,000, but to no more. 
The company was to be controlled by twenty-one trustees or managers, 
each of whom must hold c£*l,000 stock. As a recompense for promoting 
the enterprize, Asgill was to receive a bonus of ^£^3,000 stock and Barbon 
d^2,000 stock, subject to the conditions that neither might alienate it 
within seven years, nor purchase more stock than would make him the 
owner of d£'5,000 nominal \ 

Briscoe's original scheme resembled that of Barbon, but there are 
some important differences. In his office, which was called the National 
Land Banh^ it was intended that estates should be purchased outright, 
agricultural land at twenty years' purchase, ground rents at twenty-two 
years' purchase and house property at seventeen years' purchase. Loans 
were to be made thereon up to three-quarters of the value so arrived at, 
and, as in the other land banks, paid to the borrower in notes. The rate 
of interest was ^d. per diem or £^. Os. \0d. per annum. Each subscriber 
of <^50 rent had one vote in the choice of managers. Besides the 
operations on landed security, subscriptions were to be taken for 
d6*l ,000,000 in money, payable as to 10 per cent, on September 29th, 
1695, and by like instalments quarterly. In the terms of this proposal 
.£^1,500 in cash was to rank equally with £%000 in land, so that from 
the beginning, independently of other causes, the notes would have been 
at a discount. Subscribers were to receive interest at the rate of 3 per 
cent. " over and above the proportionate profits of the bank 2." 

The lists were opened on June 11th, 1695, and the promoter took 
care to recommend his scheme to owners of property. He declared that 
the freehold estates of England constituted " the best fund or security," 
but that " the servile yoke of 6 per cent, had eaten up several estates." 

1 The Settlement of the Land Bank established, anno Domini, 1695, Somers' Tracts, 
XI. pp. 16-50. 

^ The following proposals and accounts of a National Land Bank having been 
printed at London [1695] ; Proposals for Raising money for the National Land Bank, 

Aug. 7, 1695 [Brit. Mus. ????^^ 7i^l]. 

Biv. X. § 2] The National Land Bank 1695 251 

While the Bank of England advertized that it would lend money at 
5 per cent., it refused to accept titles of lands offered as security, " which 
has turned the current of business another way and leads to the setting 
up of banks in foreign countries, and the poor freeholders are left to shift 
for themselves \" By August 3rd estates, valued at ^60,270. 10*. per 
annum, had been subscribed 2, and thereafter a monthly abstract was 
issued showing the progress of the undertaking I Towards the end of 
the year the bank was believed to be likely to succeed. Luttrell, writing 
under the date of August 15th, says that " both Dr Barbon's and Brisco's 
land banks go on very successfully^,'' while another writer refers to the 
latter as "standing so high in fame and making so great a noise in the 
world and being so charming and attractive^." 

Meanwhile difficulty was experienced in inducing those, who had 
undertaken to subscribe cash, to pay the call due, and on September 
17th it was announced that 10 per cent, discount was allowed on all 
moneys, handed in to meet this liability before October 23rd ^ Then 
in December there came a new development. It was well known that, 
owing to the great cost of the war, there was a serious deficiency in the 
Parliamentary supplies. Briscoe now came forward with a scheme, which 
was presented to the House of Commons on December 2nd, under which 
he undertook to provide a great part of this deficiency, on condition 
that the National land bank received legislative sanction''. The office, 
founded by Asgill and Barbon, was also in the field ; and, towards the 
end of January or in the first days of February, both institutions 
amalgamated^ The united undertaking submitted revised proposals, 
and on March 5th, 1696, the House of Commons resolved that the loan 
required " should be settled in the National land bank**.'' The act, 
which gives effect to this resolution (7 and 8 Will, and Mary, c. 31), was 
drafted on the same lines as that for founding the Bank of England, and 
the form of both was followed in 1698 in the measure authorizing the 

1 Briscoe's Advice to the Freeholder, pp. 3, 4; An Account of the National 

r . r. , Fd .. Ti/r 816. m. 10"! 
Land Bank Brit. Mus. „ . 

2 Account of the Value of Estates subscribed towards the Fund for a National 

r^ . ,. 712. m. 11 
Land Bank 11 June to 3 August 1695 Brit. Mus. — . 

r« . i»T 712.m.l"| 

3 The Monthly Account of the Land Bank Brit. Mus. ' q ^q \ • 

* Brief Relation, ut supra, in. p. 512. 

5 Anglice Tutamen, ut supra, p. 9. ^ Post-Boy, Sept. 17, 1695. 


712. m.l 

To the Hon. the Knights Citizens and Burgesses assembled, S;c. I Brit. Mus. 


8 Luttrell, Brief Relation, ut supra, iv. p. 13. 

3 Journals of the House of Commons, xi. p. 495. 

252 National Land Bank of England 1696 [div. x. § 2 

subscription of capital for the New East India company. In all three 
cases, the subscribers of a loan were to receive, in addition to the interest 
paid in money, the privilege of incorporation with certain immunities. 
The act of 1696 provides that, under certain conditions, the persons who 
raised a loan of ^2,564,000 at 7 per cent, should be incorporated as the 
Governor and Company of the National Land Banh of England, which 
should be authorized to lend on land securities to its members to an 
extent not exceeding the loan to the State. The conditions, on which 
these privileges were to be vested in the company, were that one-half 
of the loan must be subscribed before August 1st, 1696, and the whole 
of it before January 1st, 1697. Persons, who took up this loan, must 
pay on application one-quarter of the amount for which they tendered. 
Registers must be kept of lands on which money was advanced on the 
plan proposed by Asgill and Barbon. The company was to advance 
,^500,000 by way of loan on real property at 3 J per cent., if the interest 
was paid quarterly, or at 4 per cent., if paid half-yearly \ 

The subscription-books were to be opened at Exeter Exchange before 
May 25th, 1696^ and it was recorded on June 11th that the loan had 
been a failure ^ There is some doubt as to how little of the loan was 
subscribed, one account giving a total of <£*40,000, but the Chancellor of 
the Exchequer stated in Parliament that, at the closing of the lists, only 
66^7,100 had been taken up, of which ^5,000 was on behalf of the King^ 

The absence of response to this loan produced great confusion in the 
national finances for several years afterwards, and it had the effect 
of discrediting all the land banks. The reasons this issue was not 
subscribed are not far to seek. It came at the worst possible time, just 
after the run on the Bank of England and while cash-payments were 
suspended^ Coin was at a great premium, and no one was likely to 
subscribe his money for 7 per cent, with dubious contingent advantages 
when much more was to be obtained on equal, if not better, security. 
Obviously, if 8 per cent, with trading privileges was a fair rate in 1694 
and 1698, a considerably higher percentage would have been required in 
1696. Moreover the failure of this loan is an instance of the peculiar 
interaction of the Bank of England and the land banks. These had 
been rivals from the beginning, the progress of the latter had something 
to do with the suspension of the former, and that suspension again was 
a powerful influence towards preventing the incorporation of the National 
land bank. 

1 Statutes, VII. pp. 181-45. 

2 Luttrell, Brief Relation, ut supra, iv. p. 58. ^ /jj^.^ jy. p. 71. 
* The Writings of William Paterson, by S. Bannister^ London, 1858, i. p. xliii. ; 

The History and Proceedings of the House of Commons (^'Chandler's"), iii. p. 53. 
According to the latter account the lists were not opened till June 5th. 
^ Vide supra, pp. 208, 209. 

tuted BY Act of Parliament 1695). 

The circumstances which led to the establishing of the Bank of 
Scotland have been detailed by the founder of the institution, John 
Holland. This merchant is said to have been an Englishman, but he was 
acquainted with Scottish trade through his connection with the company 
for manufacturing baizes which had obtained Parliamentary sanction in 
1693^ Early in 1695 Holland had withdrawn almost altogether from 
commercial pursuits, and " was thinking only of how he might spend the 
remainder of his days in peace." A f;:iend, who was a Scotsman, when 
visiting him, was full of a scheme for the foundation of a bank in 
Scotland and urged Holland to give the matter his attention, assuring 
him that an act of the Scottish Parliament could be obtained on his own 
conditions. Holland eventually drew out a sketch of the constitution of 
a bank, and in a few days the unknown intermediary had embodied it 
in an overture of an act. At the same time the support of Scotsmen, 
resident in England, had been obtained, so that a considerable amount of 
capital had been secured before application was made to Parliaments 
In the summer of 1695 all Scotland was enthusiastic over the prospects 
of the Darien scheme, which had been passed by the Estates on June 26th. 
Paterson intended this company to undertake banking operations, and he 
was considerably chagrined to find that on July 17th another act had 
been passed, not only establishing a banking company, but giving it 
a monopoly for twenty-one years. In a letter, written in August, he 
says, " I desire to see a copy of the bank act so surreptitiously gained. 
It may be a great prejudice, but is never likely to be of any matter 
of good to us, nor to those who have it^" 

The following are the leading provisions of the act : 
(a) Incorporation was effected under the title of the Governor and 
Company of the Bank of Scotland, as one body corporate and politic with 

1 Vide supra, p. 173. 

2 The Ruine of the Bank of England and of all Publick Credit inevitable, by John 
Holland, London, 1715. 

3 The Writings of William Paterson, by S. Bannister, London, 1858, i. p. xxxvii. 

254 The Bank of Scotland [div. x. § 

the usual powers of perpetual succession and a common seal, of purchasing 
and alienating lands, tenements and all other heritage, as likewise all 
sums of money and other moveable goods and gear whatsoever: and 
further to do and execute all other things which any other company 
or body politic can or may lawfully do or execute, and that as amply and 
fully as if the several matters and things were particularly set down 
in this act^ 

(5) Capital and Subscription. The capital was fixed at ^£^1 ,200,000 
Scots, being the same amount, hut in Scottish currency^ as that of the 
Bank of England. In sterling currency the capital of the bank of 
Scotland was .^'l 00,000. A subscription book was to be opened at 
Edinburgh from November 1st, 1695, to January 1st, 1696, in which all 
persons might subscribe, subject to the following conditions : 

(i) The minimum subscription was <^1,000 Scots and the 
maximum ,^^'20,000 Scots. 

(ii) 10 per cent, of the subscription was to be paid on application, 
(iii) Two-thirds of the total subscription was to belong always to 
persons residing in Scotland 2. 

(c) Constitution. The management was in the hands of a governor, 
a deputy-governor and twenty-four directors, elected annually. The 
qualification for votes in the election of governor and directors was to be 
one vote for every d£*l,000 Scots of stock. Persons eligible for the office 
of governor must hold at least ^£^8,000 Scots in their own right, those 
eligible as deputy-governor £6fi00 Scots, and those eligible as directors 
c£*3,000 Scots. The quorum consisted of any seven of the governor, 
deputy-governor and directors. Vacancies, through death or lapse of 
qualification, were to be filled by votes of the members*. 

(d) Powers of the Court. Besides being responsible for the general 
management the directors were empowered : 

(i) To determine the date and amount of further calls in 
addition to the 10 per cent, paid on application, under penalty of 

(ii) To lend upon real or personal security "and to receive 
annual rent for the same at 6 per cent, as shall be ordinary for the 

(iii) The capital of the bank was to be employed in the trade of 
lending and borrowing money upon interest and in no other^. 

(e) Special Privileges : 

(i) Transfers of shares might be made either by will or by 
registry in the company's books " without necessity of confirmation or 
further formality ^" 

1 Act of Parliament for erecting a Bank of Scotland , p. 2. 2 jf)id,^ pp. 1^ 2. m 

3 Ibid., p. 3. * Ibid., p. 4. ^ Ibid., p. 8. « Ibid., p. 6. ^ 

Div. X. § 3] Constitution and Privileges 1695 255 

(ii) The joint-stock of the bank, continuing in money, was to 
be free from all public burden to be imposed upon money for 21 years, 
(iii) During 21 years no other "distinct company of bank'^ 
might be established in Scotland. 

(iv) In cases of bankruptcy or forfeiture of the property of a 
shareholder, provision is made "to expose by public roup such shares 
and the profit thereon to any other person who shall bid the highest 
price therefore. . .and the price arising from the said roup to be made forth- 
coming by the said company to the creditors, heirs or others succeeding 
to the right of the person so denounced or forfeited ^" 

(v) Foreigners, who became shareholders, also became naturalized 

(f) Security by and for the hank. "It is hereby declared that 
suramar execution by horning shall proceed upon bills or tickets drawn 
upon or granted by or to and in favour of this bank and the managers 
and administrators thereof for the time, and protests thereon in the 
same manner as is appointed to pass upon protests of foreign bills by the 
20th act Pari. 1681 K. Ch. II. and sichlike that no suspension pass of 
any charge (for sums lent by this bank or to the same) but upon discharge 
or consignation of the sums charged for allenarly^." 

{g) Payment of Dividends. It is also provided that no dividend 
shall be made, except out of the profits on the paid up capital and with 
consent of the adventurers in a general meeting^. 

Of the ^400,000 Scots (or i^33,333. Qs. M. sterling), available for 
persons residing in England, the whole amount was subscribed for in one 
day, and the remainder of the authorized capital amounting to d^800,000 
Scots (or .^66,666. \Ss. ^d. sterling) was taken up in Scotland by the 
date specified in the act for the closing of the lists ^ It was indeed 
alleged that "the country clamoured against the management for the 
packt way they took to make up their subscriptions ^''"' 

Just as in the manufacturing industries, Scotland was utterly 
destitute of technical skill ; and, though two-thirds of the capital had 
been subscribed by Scotsmen, none of them were competent to undertake 
the control of the business to be established. Accordingly Holland, who 
had been elected governor, agreed to reside for some time in Edinburgh 
and to superintend the early operations. He relates that at first, 
through ignorance of the methods of banking, his colleagues objected to 
his recommendations, but that in the end they consented to be guided by 

^ Act of Parliament for erecting a Bank of Scotland, p. 7. 
2 lUd., pp. 6, 7. 3 lud., p. 6. 

* A Historical Account of the Bank of Scotland, Edinburgh, 1728, p. 2. 
^ A Premonitor Warning or Advice [hj J. Armour of Glasgow], Edinburgh, 1702, 
p. 7. 

256 The Bank of Scotland [div. x. § 3^ 

his experienced These facts account for the arrangement, which also 
obtained in the Scots linen manufacture, that the deputy-governor and 
half the directors should be Scotsmen residing in Scotland, and the 
governor and the remaining twelve directors represented the shareholders 
living in England 2. 

It was not long before the bank began business. On the completion 
of the subscriptions in January 1696, 10 per cent, of the total — this being 
the amount specified in the act as payable on application — was collected 
from the proprietors, amounting to ^^120,000 Scots or J*10,000 sterling^ 
Notes were issued for ^100, ,^50, ^20, £\0 and £B sterling ; and the 
bank made loans on heritable and personal bonds and by the discount of 
inland bills. It was in this way that it placed its notes in the hands of 
the public. In order to facilitate inland exchange, branches at Aberdeen, 
Dundee, Glasgow and Montrose had been opened by April 9th, 1696, 
but it was found necessary to close the first and last named on Dec. 24th 
of the same year. These were the main classes of business transacted*, 
deposit-banking not having been begun at this time. 

Once business was started, the bank had soon to meet a very dangerous 
competitor in the Darien company, which began to issue notes during the 
first year of the bank's existence ^ This constitutes one of the very many 
instances of the invasion of the monopoly of an early company. The 
Darien company circulated notes to a considerable value, which were forced 
into circulation, partly by being used in making payments, and partly by 
being issued to proprietors in the form of a loan on the security of their 
stock in the company ^ The directors of the bank were considerably 
perturbed by such competition ; but popular feeling, in favour of the 
Darien company, was so strong, even amongst bank shareholders, that 
Holland was afraid to risk making any attempt to restrain his rivals from 
the issue of notes. The bank saw that, if a contest were begun " it 
might suffer an affront in its infancy by a demand greater than its 

1 The Ruine of the Bank of England, ut supra. 

2 Historical Account of the Bank of Scotland, p. 2. 

3 From the Records of the Bank. 

* Historical Account of the Bank of Scotland, p. 3 ; The History of Banking in 
Scotland, by A. W. Kerr, p. 23 ; The One Pound Note, by William Graham, 1886, 
p. 3. The Glasgow branch was closed on January 3rd, 1697, and that at Dundee 
on October 6th, 1698. 

^ There is an impression of the plate from which these notes were printed in The 
Darien Papers (Bannatyne Club), p. xxix., and a reproduction of some of them in A 
History of William Paterson and the Darien Company, by J. S. Barbour, 1907, p. 32. 

^ Historical Account of the Bank of Scotland, p. 4. The Darien company, while 
invading the spirit of the act founding the bank, was protected by the letter, which 
bound the legislature not to establish "any distinct company of bank." The 
Darien company had decided to issue notes by June 18th, 1696 (Darien Papers, 
ut supra, p. 9). 

Div. X. § 3] Effect of Darien Co.'s Note Issue 1696 257 

cash^;' Therefore its policy was to " lie by " for a little, and endeavour 
to maintain its credit. This appears to have been seriously strained, for 
it became necessary in September to ask for a payment by the proprietors 
of 20 per cent. It would appear that the ^^20,000 realized was not 
considered as an addition to the permanent paid up capital; but, as 
happened in the case of a similar call in 1704, as a loan to the bank. 
An official of the bank speaks of " some loss " having been incurred 
at this time^; and it was popularly reported that, during the early years 
of its existence, " common interest had not been made'.'' Not only was 
the credit of the bank threatened, but business was almost suspended. 
As time went on, the reckless nature of the banking operations of the 
Darien company resulted in a serious check to its financial status, even 
before the disastrous consequences of the first expedition to New 
Caledonia were known*. 

No sooner had this difficulty, " which was thought greater than any 
the company could ever meet afterwards,'"* been surmounted than 
"negotiations'" were recommenced. It shows how great were the 
impediments to communication between important towns in Scotland, 
owing in some degree to the rigidity of the interpretation of the 
privileges of the Royal Burghs, that there were very few remittances to 
be made from Edinburgh to the provinces, and hence " the money, that 
was once lodged at any of those places by the cashiers issuing bills 
payable at Edinburgh, could not be withdrawn thence by bills from 
Edinburgh ^" It was considered also that the exchange trade, besides 
being an encroachment on private merchants, was " very troublesome, 
unsafe, and improper." For these reasons the Glasgow branch — the 
only one now remaining of those opened in 1696 — was closed in 1698 
and the bank " brought its money back by horse carriage to Edinburgh." 
Another effort towards the extension of business appears to have been 
made about 1699, when the issue of notes of 20^. sterling was proposed, 
but it was not until 1704 that the scheme was carried out^ 

Scarcely had the competition of the Darien company ceased when the 
bank was subject to a fresh trial, this time arising out of the mediaeval 
legislation against usury. By an act, 1 Charles II. cap. 49, interest on loans 
was fixed on certain conditions at 5 per cent. In 1696 or 1697 the bank 
had lent £^00 at 4 per cent., subject to payment being made within 

^ Historical Account q/ the Bank of Scotland j p. 4. ^ 

2 Ibid., p. 4. 

^ A Premonitor Warning, ut supra, p. 7- 

4 Historical Account of the Bank of Scotland, p. 4; vide supra, ii. pp. 218-21. 

^ Historical Account of the Bank of Scotland, p. 5. 

6 Extract from the records of the bank taken by Mr J. S. Barbour in History of 

Banking in Scotland, by A. W. Kerr (1902), pp. 335, 336. 

s. c. III. ^' 

258 The Bank of Scotland [div. x. § 3 

thirty days. If the loan remained outstanding for a longer term, the 
rate was to be 6 per cent. This agreement led to an interesting action. 
The debtor pleaded that he could not be held liable for more than the 
legal rate of 5 per cent. — a contention, which if established, would have 
had serious consequences for the bank. Counsel for the other side relied 
partly on the powers, given by the act of 1695, of making by-laws, 
partly " on the evident ease of 2 per cent, in case of punctual payment, 
while the exacting six per cent, is but like a penalty or timely failing in 
a bond and cannot be accounted usury."" On behalf of the debtor it was 
replied that " private paction cannot derogate from public law " ; and 
that, if the bank's contention were accepted, 7 per cent, or 8 per cent, 
might on similar grounds have been inserted. The Lords divided on 
this point as being new, and the plurality found that 6 per cent, was due, 
"not as an annual rent but as damages liquidated between the parties^."" 

From 1699 to 1706 the bank of Scotland narrowl}' escaped being 
drawn down in the collapse of the Darien company. It is most in- 
structive to compare the position of affairs in Scotland with the analogous 
relation between the Bank of England and the South Sea company. The 
latter, like the Darien company, had the support of the government ; 
and, in providing financial assistance in 1720, the Bank of England 
barely escaped failure. The under-current of hostility between the two 
Scottish companies prevented the bank of Scotland from becoming 
involved on behalf of the Darien company — ^yet the difficulties of the 
larger undertaking brought the bank into very troubled waters. 

The foundation of the Darien company was the culmination of 
Scottish commercial policy, and the whole fate of the country's trade was 
staked on the success of its colony. To raise the capital required for 
this enterprize, as well as for the numerous recently established manu- 
factures, wealth, that was ear-marked for the personal expenses of the 
better classes, was utilized as capital. Therefore the nation, as a whole, 
was in the position of a speculator, who cannot afford to wait for a 
distant return, however great, but must have quick results to discharge his 
liabilities as they mature. In other words what is sometimes called 
" consumption capital " had been used as fixed capital, with the result 
that the nation was denuded of money owing to the exports of bullion to 
pay for ships, stores, and machinery for the new colonial and manu- 
facturing enterprizes^. Had the Darien scheme begun to yield a profit 

on its first voyage, the country would have experienced little more than 


^ Dictionary of Legal Decisions, p. 16,419. 

2 Cf. Giffen — ''to a certain extent, however, they [i.e. investments beyond the 
savings of a community] can be made. Unawares, a portion of the means required 
for consumption may be diverted to fixed investments." Stock Exchange Securities, 
p. 21. 

Div. X. § 3] Credit in Scotland 1695-9 259 

a temporary pressure ; and, with high hopes of a colonial empire, credit, 
while somewhat strained, might have remained good. As a matter 
of fact the capital called up by the Darien company (which many of the 
stockholders could not afford to pay) was, at the best, indefinitely locked 
up and, at the worst, was a total loss. Add to this the amounts 
invested in manufacturing undertakings, which were unproductive, and it 
follows that more than the available capital resources of Scotland for new 
enterprizes had been either lost or at least was temporarily unre- 

Soon the pinch began to be felt, there were many failures and wide- 
spread distress. The general credit had sunk so low that " men of very 
good fortunes could not procure money to answer their necessary 
demands ^" Every one felt the cessation of industry and the want of 
money. It is most significant that even shareholders of position in the 
Newmills company were forced to obtain advances from the managers 
on account of future dividends likely to accrue to them^ " Trade," was 
described "as ruined; the national stock wasted; the people forsake the 
country ; the rents of lands are unpaid ; houses in towns and farms in 
the country are thrown upon the owners' hands; the creditor cannot 
have the interest of his money to live on, and the debtor's person and 
estate are exposed to the law^"" Under the prevailing mercantilist ideas 
there was a general impression that the remedy was to be found in 
an increase of the circulating medium. No device succeeded, for obvious 
reasons, in adding to the quantity of metallic money in circulation, and 
like causes prevented a material expansion in the issues of bank-notes. 
But the very success of the system of a note-issue of the bank directed 
popular attention to the subject of paper-money ; and, from 1699, there 
were numerous proposals for the creation of inconvertible paper currencies 
of various kinds. Such proposals, involving as they did, the issue of 
paper-money either by the State, by municipalities or private pei-sons, 
all tended towards the abrogation of the monopoly of the bank of 
Scotland, and they were therefore considered prejudicial to its prosperity. 
In the case of the Bank of England attempts of the same kind had been 
made, but these were not so long sustained as the unsound money 
campaign in Scotland, and it was a significant fact that the acceptance 
of the project for a land bank in England by the House of Commons 
had caused a fall of £%^ per cent, in Bank stock within a fortnight*. 

1 The Occasion of Scotland's Decay in Trade [1705] (Advocates' Library Pamphlets). 

2 The Records of a Scottish Cloth Manufactory at New Mills, Haddingtonshire, 1681- 
1703, edited by W. R. Scott (Scottish Hist. Soc. 1905), pp. 245, 248, 291. 

3 Money and Trade Considered: With a Proposal for supplying the Nation with 
Money, by John Law, 1705, Chap. viii. (in Somers' Tracts, 1751, xvi. p. 383). 

4 The First Nine Years of the Bank of England, by J. E. Thorold Rogers, Oxford, 
1887, p. 50 ; vide supra, pp. 208, 209, 244. 


260 The Bank of Scotland [div. x. § 3 

The first Scottish scheme was brought before Parliament in 1699. It 
was suggested that notes should be issued by the State to the extent of 
d6*300,000 sterling in denominations ranging from <^100 sterling to 
1^. sterling. These notes were to be divided amongst the burghs 
proportionately to their contributions to the national taxes ; but, of the 
total amount due each burgh on this basis, only |ths was payable in the 
proposed paper-money. The remaining ^th, being notes of the nominal 
value of ^60,000 sterling, was to be a national joint-stock for trade 
at home and abroad ^ Burgesses were to receive such notes in satis- 
faction of debts due them, and each burgh would be allowed to pay 
one-tenth of its contribution to the public taxes in the same way. As 
the notes were returned to the national exchequer they were to be 
destroyed, so that in time the whole issue would be cancelled ^ This 
proposal had the usual characteristics of schemes for an inconvertible 
paper currency. It was to have a forced circulation, and it promised 
redemption. There was latent in it the danger that the issue would not 
be limited to the specified amount. 

The time was now ripe for the appearance of Hugh Chamberlain, 
who had schemes for the raising of a credit system on the security of 
land^. It is stated that he had " with the project in England broke and 
spent so great a part of his own money that he was necessitated to fly 
out of the Kingdom '*.'" The best commentary on the somewhat cryptic 
nature of his earlier proposals is to be found in the revised editions 
submitted to the Scottish Parliament. The following may be taken as 
a characteristic example of his methods as explained to the English 
public : " the proposer lends the sum of <^8,000 on the security of ^150 
per annum for 150 years at the yearly interest of only twenty -five 
shillings for every ^100, to continue for 100 years and never return the 
principal, or five shillings interest and return the principal by twenty 
shillings a year for every d^lOO, or (which is to the like purpose) the 
bank gives 80 years' purchase for a rent charge of ^100 for 100 years"."" 
The earliest scheme brought forward by Chamberlain in Scotland, in 
1701-2, very closely resembles the third of the three methods outlined in 

1 On the basis of this scheme it was proposed in 1701 to form a " Society anent 
Export and Import" to the capital of which the New Mills company undertook to 
subscribe £1,200 Scots in three equal instalments — Records of a Scottish Cloth Manu- 
factory, ut supra, p. 287. 

2 Parliamentary Papers, 1699 (General Register House Edinburgh) — Proposal 
for advancing Trade. 

' Vide supra, p. 208. 

* MS. " Memoirs concerning the affairs of Scotland from Queen Anne's Acces- 
sion to the Throne to the Commencement of the Union of the Two Kingdoms " 
(Lib. Univ. St Andrews BN . 3 . 77), p. 59*. 

^ Rogers, First Nine Years of the Bank of England, p. 53. 


Div. X. § 3] Chamberlain's Land Credit 1701-2 261 

his London advertisement of 1696. He points out the advantage a 
country enjoys when money is abundant and goes on to argue "that 
bills of credit, founded upon land and strengthened by the sanction of 
the law and made in a form incapable of forgery, will be an excellent 
medium of trade, equal in all respects to gold and in many respects 
superior to it^" Trustees were to be appointed, who would receive 
conveyances of non-encumbered estates which the proprietors were 
prepared to pledge to the proposed " land credit bank." The trustees 
would then lend the proprietor a sum equal to 100 times the present 
annual value of the pledged estate, payable in the notes of the bank. 
The land-owner became the tenant of the land bank and undertook to 
repay the amount in the form of a rent, payable also in land bank notes 
for 100 years at the expiration of which period the paper-money created 
would be returned and destroyed. The proposed bank was not only to 
create credit, but to act as a trading institution. The heritors and 
proprietors, who pledged their lands, were to be incorporated. The 
notes returned to the bank were not to be destroyed immediately but to 
be allocated as follows : 30 per cent, would be utilized as capital for 
trading operations as the capital subscribed by the individual proprietor 
that had paid them in, 40 per cent, reverted to the proprietor, 10 per 
cent, was to be devoted to relief of taxation and the remaining 20 per 
cent, was retainable by Chamberlain as a payment for promotion. How 
the ultimate cancellation of the obligations was to be effected does not 
appear ^ 

A revised version of the scheme was published by Chamberlain's 
Scottish partner, James Armour, in 1702. Loans were to be made 
in notes of the land bank as before, but repayment would be distributed 
over a period of only 29 years, the annual amount of which would be at 
the rate of 4 per cent, on the sum advanced. This interest was payable, 
as to three-quarters in notes of the land bank and the other quarter must 
be lodged in cash. The latter receipts would be utilized as capital for a 
trading venture, the benefits of which would accrue to the subscribers. 
It was a characteristic of this scheme also, that the notes should be 
cancelled at the end of the 29 years, but at that date only 87 per cent, 
would have been returned to the office, so that it must have been 
contemplated that the bank, in its trading capacity, would have made 
sufficient profits to cancel the outstanding 13 per cent.=^ If we try to 

1 Proposals of Dr Chamberlain [Advocates' Library Pamphlets, Brit. Mus. 
1139. e. 15]; Papers relating to a Bank of Credit upon Land Security [Brit Mus. 
1139. h. 18]. 

2 Ibid. 

3 A Premonitor Warning or Advice, pp. 9, 10. In 1696 there had appeared a 
tract entitled^ Proposal to supply the Defect of Money, which, from internal evidence, 
may be attributed to Armour. 

2i^S The Bank of Scotland [div. x. 

imagine the position of a proprietor considering the proposal of 1702, it 
might take shape in his mind as giving the immediate advantage of 
Securing a mortgage at much less than the current rate of interest. Not 
only so, but there was the contingent benefit that, supposing the pro- 
posed trading side of the land credit succeeded, his dividends from it 
might reimburse him a large part of the interest he had paid. On an 
average profit of 20 per cent, on the proposed trading capital, calculated 
as accruing from the payment of each instalment of interest receivable in 
cash, such profit would repay nearly the whole of the remaining interest 
which was to be returned in notes. Thus the proprietor, who joined the 
scheme, would have his original loan for nothing and a dividend-paying 
investment besides. 

The fallacies of such a project — as for instance the inevitable deprecia- 
tion of the obligations of the land bank — have been sufficiently insisted 
on by many writers. But to obtain the true historical perspective it is 
necessary to learn how a financial juggle, of the species described, appeared 
to the men who were affected by it. That Chamberlain's proposals were 
considered worth investigation is proved by the fact that the bank of 
Scotland expressed a desire to be furnished with details of the scheme. 
The proposer of the scheme had an interview with the directors at the 
request of the court and produced papers and tables, showing the profit 
that would accrue to the bank, if the project were carried into practice. 
After some consideration the bank replied that the scheme "did not 
agree with their present management," and declined to assist it^ 

Many other propositions of a similar nature were freely discussed, and 
the effect of such efforts to tamper with the currency was very prejudicial 
to the bank, in restricting the circulation of its notes. This might be 
described as the Scylla of Scottish currency problems at the time. The 
Charybdis was the opposite tendency to remedy the debasement of the 
current money and raise it to the English standard. It was on the latter 
rock that the bank came near making shipwreck. There were some 
who maintained that the monetary stringency was attributable to 
the depreciation of the currency, and one writer quotes with keen 
enjoyment a remark supposed to be made by "Lord Burleigh in Queen 
Elizabeth's time"" that "all the other remedies of banks, loans and such 
like raggends of wit were monte-bank receipts for State-evils ^^ In 
December 1704, a rumour spread over the whole kingdom that the 
Privy Council was about to "raise the value of the several current 

1 A Premonitor Warning or Advice, ut supra, p. 7. 

2 A Proposition for Remedying the Debasement of Coyne in Scotland] Lib. Univ. 

_^^ . , C. 10. 261 K 
St Andrews — L p. 6. 

Div. X. § 3] Cash Payment suspended 1704 263 

species^'' When the remedy for the depreciation of the currency was 
interpreted in this sense, there would be an obvious gain in holding the 
" species '' to be raised in value, and therefore there was a great demand 
for cash in exchange for bank-notes. It was alleged that the bank had ex- 
ported bullion, and that the chief money, circulating amongst merchants, 
consisted of bank -paper 2. However this may have been, the management 
was taken unawares and on December 18th, 1704, the cash being 
exhausted, it was necessary to suspend payment of notes'. 

Though the bank met with this misfortune, its position was not 
unsound. According to one writer, "the stoppage was foreseen and 
might have been prevented." The scarcity of metallic money was 
aggravated by recent exports of bullion, and the bank endeavoured to 
provide money for small currency, by issuing £\ sterling notes {i.e. notes 
for £\% Scots)*. It had been in the habit of holding cash against 
one-quarter to one-fifth of the nominal amount of its notes in circulation". 
Whether this limit had been over-passed or not is by no means clear, 
and an examination of the books was made on the day after the stoppage, 
as a result of which the following balance sheet was drawn up : 

Bank of Scotland^. 

1704. Dec. 19th. £ s. d, £ s, d. 

To Bank Bills charged upon the Trea- 
surer p. accop. in Ledger d. fol. 3... 146,735 
Deduct for so much thereof in the 

Treasurer's hands this day ... 95,888 
Remains nett of Bills running through- 
out kingdom 50,847 

Ballance due to the Adventurers ... 12,352 8^ 

Summa £63,199 8j 

1704. Dec. 19th. £ «• <^- 

By cash in Treasurer's hands, remaining in old Merks ... 1,600 
By debts due upon Heritable Bond, per particular a/c, 

besides interest thereon 21,968 6 8 

By debts due upon mov^ Bond, p. particulars, besides 

running interest as above 27,682 8 6\ 

By Inland Bills, due per particular list besides running 

interest ... ... ... ... ... ••• ••• 11^263 16 8 

By the Bank office, for the first coast of their house 

besides al reparations 694 8 lOg 

Summa £63,199 8^ 

1 Historical Account of the Bank of Scotland, ut supra, p. 7. 

2 The Circumstances of Scotland considered, 1705, p. 5. 

3 Memorial and Intimation of the Governor and Company of the Bank of Scotland, 
1704, reprinted in A Century of Banking in Dundee, by C. W. Boase, Edinburgh, 
1867, pp. 19, 20. 

4 Money and Trade Considered [by John Law], Edinburgh, 1705, p. 39. 

6 Ibid., p. 38; MS. Pamphlet on a Land Bank by Patrick Campbell of Monzie, 
quoted in The One Pound Note, p. 21. 

6 A Century of Banking in Dundee, by C. W. Boase, Edinburgh, 1867, p. 21. 

264 The Bank of Scotland [div. x. § 


This account is interesting as showing that the liabilities consisted 
altogether of outstanding notes, and also that the bank had been 
influenced by land credit schemes in making loans to the extent of over 
43 per cent, of its total liabilities on heritable property. The excess 
of assets over liabilities amounted to dfi^l 2,352, which left the small sum 
of ^£^2,352 as profit, after deducting the paid up capital of ^10,000 or 
23J per cent. The payment of a dividend of 20 per cent, in the spring 
of 1705 shows that there was no attempt to form a reserve fund at this 
date. In fact the early policy of the directors seems to have involved 
the division of almost all the profits made; and, up to the time of the 
suspension of cash-payments, 90 per cent, had been distributed. The 
prices realized depended on the dividends. In 1699 the former varied 
from <^130 to ^£^133 Scots for the i^lOO Scots paid up, and in April 
1704, 191|^ was recorded as against a book-value in the following 
December of only 123J^ 

The governor and directors took prompt measures to allay public 
anxiety. The adventurers authorized the court to postpone cash pay- 
ments for two months, if necessary, and the notes were to bear interest 
till they could be redeemed — a stage reached on May 1st, 17051 A 
call was made from the shareholders of 10 per cent., realizing d^l 0,000 
sterling, by way of loan, which bore interest of about 5 per cent., and 
did not rank for dividend. By March 1706 one-half of the amount was 
repaid and the remainder before the end of the year^. 

This and the previous call of 20 per cent, had not been favourably 
received by the English shareholders, and many refused to pay, with the 
result that their shares were sold''. The effect of these and other sales, 
as well as the suspension of 1704, was to reduce the price recorded in 
1706 to 178J. The withdrawal of shareholders, resident in England, 
caused a change in the management of the bank. At its inception half 
the court had been elected by Scottish, half by English shareholders ^ 
Gradually more and more of the capital came to be owned in Scotland, 
and the whole court was composed of Scotsmen, thirteen trustees being 
chosen from the English proprietors to control affairs in London. Not 
long afterwards the number of shareholders, resident in London, fell 
below thirteen, and the appointment of trustees came to an end*. 

By a curious coincidence, the fact that the bank was able to carry 
on business, during the suspension, was adduced as an argument in 

^ Vide infra f Summary of Capital ^ Dividends and Prices, p. 274. 

2 Edinburgh Courant, No. 85. 

3 Ibid., No. 118. 

* Historical Account of the Bank of Scotland, p. 4. 

* Vide supra, p. 256. 

^ Historical Account of the Bank of Scotland, p. 3. 

Biv. X. § 3] Law's Scheme for coining Notes 1705 265 

favour of unsound money — thus Law supports his proposals for in- 
convertible paper-money by showing that in the early part of 1705 the 
notes of the bank "went, though there was no money" [in cash]\ 
Therefore the year 1705 was marked by a large number of proposals 
relating to the money of the country. Chamberlain again came forward 
suggesting that the notes of his proposed land credit should be issued as 
tallies, " which would be nothing imaginary, but a solid and real worth, 
being secured on land which has an intrinsic value as well as gold and 
silverl" As before, the loan made to proprietors was payable in 
" tallies," created by the land credit office. These tallies were return- 
able in the payment of interest at 5 per cent., 4 per cent, of which 
would redeem the principal in 25 years, and the remaining 1 per cent, 
was retained for the expenses of the office ^ 

A peculiar interest is connected with another scheme originated by 
John Law owing to its constituting the outline of the system which led 
to the wild speculation in France fifteen years later. According to a 
contemporary account, he was at this time living "by gaming and 
sharping and, being a cunning fellow and nicely expert in all manner 
of debaucheries, found a way quickly to get into my Lord Duke of 
Argyle's favour and in confidence of his and the Squadroni (with whom 
he was very intimate) their assistance, he presented a very plausible scheme. 
All the Court and the Squadroni (except some that were monied men) 
espoused the same, because it was found that in process of time it 
brought all the estates of Scotland to depend on the government''."" 
Law was acute enough to see that, on Chamberlain's proposals, the 
depreciation of land credit notes was inevitable. The remedy for the 
prevailing want of money, developed in Money and Trade Considered^ 
was the constituting of a Commission authorized by the State " to coin 
notes," which should be the only kind of money receivable by this body. 
These notes were to be circulated, in making loans on land to one-half 
or two-thirds of its value or in purchasing estates ^ Another plan, 
which has been attributed to Law, was the appointment of a similar 
Commission, which would employ the notes it issued in establishing 
a national fishery. The interest on the notes was to be a charge on 
" the first and readiest profits " of the undertaking, and was payable 

1 Money and Trade Considered, VjOb, p. 94. 

2 Proposals of Dr Hugh Chamberlen and James Armour for a Land Credit, 1705, 
p. 5. 

3 Ibid., pp. 1-4. 

* MS. "Memorials concerning the Affairs of Scotland from Queen Anne's 
Accession to the Throne to the Commencement of the Union of the two Kingdoms 
of England and Scotland in May 1707 " [Univ. Lib. St Andrews BN . 3 . 77], p. 59* 

^ Pp. 85, 86 ; cf. Money and Monetary Problems, by J. S. Nicholson, London, 
1901, p. 176. 

266 The Bank of Scotland [div. x. 

in gold at the rate of 3 per cent.^ Yet another proposition reverted 
to the idea of a land bank, suggesting a loan in notes of this bank, 
repayable in similar paper in twenty equal instalments^. A further 
project described as "a land-mint" reached the stage of presenting an 
overture of an act, which might perhaps be described as a mutual land 
bank. This undertaking was to be divided into 1,000 shares, of which 
any subscriber might acquire from one to twenty by giving good land 
security to the value of £\00 sterling against each that he took up. 
When 200 shares had been allotted the land-mint was to begin opera- 
tions by " coining notes upon land^" 

The public ignorance of finance may be gathered, not only from 
schemes such as those already noticed but even more clearly from others 
less honest. One projector, in an overture submitted to Parliament, 
states that " he had his thoughts on paper-money as much as any man, 
and was for some time of opinion that it wanted nothing but an act 
of Parliament to give it a currency, but upon riper thoughts it is 
evident no human power can force faith," and therefore, it is con- 
cluded, paper-money is not a proper expedient to remedy distress*. If 
faith could not be forced, the author is of opinion it could be deceived 
by what he appropriately describes as "lye-money." The arguments 
are as old as the debasement of currencies, what is new is the hint that 
the bank of Scotland should be made the agent of the government in 
the fraud. It was contemplated to obtain deposits of plate to the value 
of .^^50,000, and coin it, by the addition of alloy, into cash of the 
nominal value of ^75,000. The owners of plate were to receive .^50,000 
of the new debased coins, leaving ^^25,000 to increase the capital of the 
bank, which could pledge its credit to four times the amount or d^l 00,000. 
This sum at 4 per cent, would produce ^^4,000, of which ^1,000 is 
allowed for expenses, and the remaining d6*3,000 added to the cash 
already in use. Once the process is started the propounder of it 
promises remarkable results as may be seen by the following table : 

Employment of lye-money hy the Bank of Scotland. 

Deposit of plate worth £50,000 coined into £75,000 

From which paid owners of plate £50,000 £50,000 

Balance utilized by the bank £25,000 

^ Two Overtures, S;c. — The First for supplying the present scarcity of coyn, and 
improving Trade: The Writings of William Paterson, by S. Bannister, ii. p. xliii. 

2 Parliamentary Papers, 1704— Overture for Establishing a Land Bank Office, 
whereby the Nation may be rendered rich and happy. 

3 Parliamentary Papers, 1705 — Act for a Land-Mint. 
* Parliamentary Papers, 1705— Money Encreased and Credit Raised, Edinburgh,] 

1705, pp. 1, 2. 

Div. X. § 3] " Lye-Money " proposed 1705 


Gross profit, 

Nett profit, 

Credit being 

four times 



being 4 °/o on 
credit of 


being added to 
cash of 



previous year 

previous year 











































Thus, according to these figures, there would remain an aggregate 
gain at the end of seven years, sufficient to make good the amount 
extracted from the "lye'' coinage and a balance of profit besides. It 
was fortunate that, in the midst of these and other wild proposals for 
tampering with the currency, there remained a body of sound opinion. 
The author of the Occasion of Scotland's Decay in Trade, Edinburgh, 
1705, supposed by some to have been Paterson, lays down the axiom 
that "no bank can succeed without a considerable fund of cash to 
answer necessary demands." This fact constitutes the radical objection 
to Law's scheme " of an imaginary credit on tallies or notes," as well as 
to the obligations of a land bank. It is argued that the forced circula- 
tion of inconvertible paper-money would lead to the hoarding of cash, 
with the result that metallic money would soon command a premium, 
while conversely the tallies or notes of a land bank would begin to 
depreciate. It is also asserted that such paper-money would not be 
accepted at home, and as a consequence trade would be impeded and 
foreign commerce (on the assumption that Scotland had an excess of 
imports over exports in value) could only last as long as merchants had 
bullion to exports This tract deserves praise as taking a firm stand on 
the question of metallic money; and doubtless this and similar arguments 
had weight with Parliament, which in 1705 " agreed that the forcing of 
any paper credit by act of Parliament was unfit for this nation'^." 

The resolution of the Estates disposed of the attempts to introduce 
inconvertible paper, and the next important event in the history of the 
bank of Scotland was the reform of the coinage as ordained by the Act 
of Union. The bank of Scotland gained some credit by a mistake of 
the Bank of England. The latter, on the payment of " the Equivalent," 
due to Scotland, sent ^100,000 in cash and .£298,085. 10^. in Exchequer 
Bills, with a view to circulating English paper-money in Scotland. 

1 Reprinted in The Writings of William Paterson, ut supra, ii. pp. li., lii. 

2 Acts of the Parliaments of Scotland, xi. p. 218. 

268 The Bank of Scotland [div. x. § 

Scotsmen indignantly rejected the Bills, and it was stated that the 
payment in cash of the greater part of the amount, due by England, 
might have been avoided, had the bank of Scotland been entrusted with 
a share in the operation ^ Probably it was for this reason that the 
Scottish bank obtained the privilege of acting as agent for the govern- 
ment, in calling in the existing Scots currency and issuing sterling 
money in exchange for it. For the trouble involved, the bank received 
a commission of one-half per cent.^ The value of the coins called in 
is stated to have been ^£'411,117. 10*. ^d. sterling, so that the com- 
mission, though small in amount, equalled more than 20 per cent, 
dividend^. The indirect results were even more satisfactory, for the 
bank was able to offer notes or sterling coin in exchange for the Scots 
money paid in, and this experience brought the directors to see the 
advantage of accepting deposits. 

The eight years from the Union to the Rebellion of 1715 might be 
described as the most profitable in the early history of the bank. In 
the nine years from 1699, when a dividend was first declared, 126 per 
cent, or an average of 14 per cent, was paid, while in the eight years 
from 1708 to 1715 distributions were made of 178 per cent, or an 
average of 22^ per cent. — those paid in 1713, 1714, 1715 being 30 per 
cent, each year. Besides, the directors believed that the bank enjoyed 
the support of the government, and it was not thought necessary to 
apply formally for a renewal of the monopoly, which was due to expire 
in 1716. Even before the Union, this question was discussed by the 
management, but it was considered that no Scots Parliament would 
sanction a rival bank ; and, after the Union, they were of opinion that 
no institution founded by "foreign*" {i.e. English) capital would obtain 
public support — a dream that was rudely dispelled in 1727^. The 
recorded quotations of the shares show a similar confidence on the part 
of investors. From the price of 178 J in July 1706, the quotation had 
risen to between 190 and 204 in 1709 and had further advanced to 227f 
in 1715. 

These years of prosperity appear to have lulled both shareholders 
and directors into a false security. As early as 1705, when, as has been 
shown, the monetary position was critical, the adventurers did not 
attend the general meeting in sufficient numbers to form a quorum, 
and it was necessary to "desire and entreat them" to be present at 
the adjournments The conservative policy of the directors in the first 

1 The History of the Union [by Defoe], 1709, Appendix, p. 22. 

2 Historical Account of the Bank of Scotland, p. 9. 
^ An Introduction to Mr James Anderson's Diplomata Scotice, by Thomas Ruddi' 

man, 1773, p. 175. 

* Historical Account of the Bank of Scotland, p. 28. 
6 Edinburgh Courant (26 March, 1705), No. 16. 

Div. X. § 3] Position and Prospects 1707-19 269 

few years of the eighteenth century had become accentuated as time 
went on, and there was a want of foresight in meeting new developments 
or being prepared for emergencies. The bank suffered from this attitude 
in 1715, when, through the Rebellion, there was a run ; and, after it had 
lasted for about eleven days, payment was suspended ^ The bank alleged 
that the suspension was due to the fact that the cash, held on behalf of 
the government, was lodged at the castle to prevent its falling into the 
hands of the rebels^; but, if there was sufficient cash to meet the demands, 
there should have been no insuperable difficulty in securing the deposits 
of the government and at the same time honouring the obligations of 
the bank. If the statement is intended to suggest that the suspension 
was engineered from within the institution with a view to prevent 
disaffected persons from obtaining cash, it would generally be held that 
the officials of the bank had no right to usurp the functions of the 
judicature, or to make the loyal suffer with the disloyal. It would 
appear that either losses were made at this time, or else that the total 
profits were not now divided, as seems to have been the case in the past. 
In 1716 no dividend was paid, and for the next four years the distribution 
was at the average rate of 18f per cent., as compared with 30 per cent, 
for each of the three years 1713, 1714, 1715. 

After the Rebellion there was a want of enterprize in the policy 
of the bank. Before the Union, the ports of the East Coast had been 
the chief trading centres, and the commercial pre-eminence of the district 
round the Forth was unquestioned. After the Union the withdrawal of 
the Scottish protective system damaged for a time the trade of the East, 
but as a compensation, the opening of the colonial trade brought a very 
remarkable prosperity to Glasgow and the West. The bank of Scotland 
had not given sufficient attention to the new commercial developments, 
and therefore complaints were soon made that Scotland wanted more 
banking facilities'. Therefore from 1719 there were numerous pro- 
positions to widen the area of the bank's operations, at first by an 
addition to its capital; and later, when these were declined, by the 
establishment of a rival institution in 1727. 

The earliest proposal for increasing the capital of the bank came 
from a group of the holders of Equivalent Debentures— this stock having 
been issued at the time of the Union to provide "the Equivalent "" due 
to Scotland. On the precedent of the Bank of England and the Million 
bank, it was proposed that holders of these Debentures, owning in all 
<£250,000 of the bonds, should add these to the capital of the bank. 
The eff^ect of the operation, so far, would have been that the capital of 

1 The One Pound Note, nt supra, p. 26. 

2 Historical Account of the Bank of Scotland, p. 10. 

3 Ibid., p. 11. 

270 The Bank of Scotland [div. x. § 

the bank would have stood at <£>350,000, of which ,^^100,000 sterlia 
(being the original capital) would have been paid to the extent of 
0^10,000 sterling and the remaining ^^250,000, being the subscribed 
Equivalent Debentures, would have been fully paid. The interest on 
these Debentures, which were a 4 per cent, stock, would have been 
transferred to the bank. 

To avoid the confusion of a co-existing fully paid and partly paid 
capital, it was further suggested that, inasmuch as bank shares had only 
10 per cent, paid, the new Equivalent capital should be transformed 
to the same footing. This was to be effected by the bank paying the 
subscribing Equivalent Debenture holders nine-tenths of their bonds in 
bank bills at 5 per cent., leaving ^£^25,000 outstanding. This £%5Si00 
was to be added to the paid-up capital, making the new capital £^50^^00 
authorized and ,^35,000 paid up. The bank, as reconstituted, was to 
receive the <^1 0,000 annual interest on the Debentures, d^600 for manage- 
ment, and the benefit of £%fiOO per annum allowed for all pretensions 
of growing equivalents, due to Scotland, and the disposal of =£^1 4,000 
for encouragement of the Scottish woollen industry \ 

This scheme would have been justifiable to the bank shareholders 
only had they been in serious want of new capital, which could not 
have been raised except on onerous terms. As a matter of fact the 
directors believed that they did not need any fresh capital ; and, even 
had they required it, the proprietors were willing to subscribe the sums 
asked, as they did some years afterwards. The new shareholders would 
have gained to a large extent at the expense of the old. For a 4 per 
cent. Equivalent Debenture, the owner would receive d^90 in bank bills, 
paying him at the rate of 5 per cent., and ^^10 in bank shares. Sup- 
posing the dividend of 20 per cent., paid in 1719, could have been 
maintained, there would have been the following advantages in making 
the exchange : 

Position of owner of £\00 Equivalent Debenture. 

Prior to exchange under scheme After exchange on amalgamation 

for amalgamation £ s. d. 

£100 at 4 7„— Income £4 90 % in Bank Bills at 6 % yield ... 4 10 

10 7„ in Bank Stock at 20% yield ... 2 

£6 10 

This meant a gain of 62J per cent, in income to the new share- % 
holders, but with a slightly decreased security. Conversely, there would 
have been a material loss in the income apportionable amongst the 
original shareholders, who, to gain ^^225,000 government stock, paying 

^ Historical Account of the Bank of Scotland ^ pp. 12, 13. 


Div. X. § 3] Scheme for Increase of Capital 1719 271 

4 per cent., would have to give 5 per cent., besides surrendering five- 
sevenths of the profits made under the new system. Whether business 
would have expanded sufficiently to increase the bank's income to a 
material degree is doubtful. 

Another point to which attention is drawn was the position of affairs, 
should the bank fail. The new shareholders would only lose the 10 per 
cent, they held in bank stock, whereas the bank itself would have to 
make good d^225,000 at 5 per cent., for which they had received 
.^250,000 at 4 per cent.^ Besides these objections, there was, in 
addition, the important consideration, that an enormous increase in 
the liabilities of the bank would have been accompanied by no addition 
to its resources in cash; for, although for book-keeping purposes, the 
Equivalent Debentures would rank as "government securities,'' in the 
first quarter of the eighteenth century such Debentures were far from 
having the ready market open to a trustee-stock at the present day. 
At the same time, while the bank was well-advised in declining this 
particular proposal, it should not have adopted a non possumus attitude 
to the demand for increased banking facilities, and it was from this 
position of the bank itself that the danger of further opposition arose. 

The proposer of the plan for extending the capital of the bank by 
the inclusion of the Equivalent Debenture holders, received the rejection 
of his overtures with a considerable amount of heat, and set himself 
to the formation of another scheme, which it was thought would compel 
the bank to receive new subscribers. In the next year (1720) he joined 
with seventy-four others in forming a company known as the Edinburgh 
Society for Insuring Houses against loss hy Fire. There seems reason 
to believe that this was not a bona fide insurance undertaking ; because, 
at this time, there was already in existence, another company, which 
was doing a good business. In any case, it soon became evident that 
the Edinburgh Society was not destined to obtain support in effecting 
fire insurances. The management then declared that "insurance was 
the small — yea the meanest part of their designs," and to mature their 
wider plans a Committee of Secrecy was appointed. Subsequent events 
showed the nature of the deliberations of this body. They collected 
about d^8,400 in notes of the bank of Scotland and in actions of the 
South Sea company. At the same time it was arranged that effbits 
should be made to induce the public departments to withdraw their 
deposits. Accordingly, the notes were presented, and the Commissioners 
of the Equivalent withdrew the deposits standing to their credit. How- 
ever the bank was able to meet both classes of demands for payment, 
and the attempted run proved a fiasco. Still the Edinburgh Society 

^ Historical Account of the Bank of Scotland, p. 15. 

272 The Bank of Scotland [div. x. § 


thought that the bank woi;ild be more disposed, after an unpleasant* 
experience of this kind, to accept certain proposals which were now 
submitted. These were framed on the model of the amalgamation 
between the Old and the New East India companies^ and provided that 
the Edinburgh Society should purchase from the present adventurers in 
the bank, 600 shares (or exactly one-half of the total capital) at £9^00 
Scots or a premium of 100 per cent. It was evidently contemplated 
that each shareholder in the bank should sell one-half of his shares ; and, 
to prevent an " interregnum "" owing to directors becoming disqualified, • 
it was proposed that, in any case where a qualification was reduced below 
the statutory amount, the completion of the transfer should be post- 
poned till after the next meeting. 

The bank refused in peremptory terms to entertain this arrangement. 
The Edinburgh Society made the mistake of offering a price to the 
adventurers, which was lower than that realized at the last sale — the 
latter having been 260 2, as against 200 now tendered. Apart from 
this, the directors saw that once an arrangement of the kind suggested 
was carried into effect, there would be danger of competitive bidding 
for shares by both parties so as to obtain control of the bank. The 
dispute, as far as it affected the Edinburgh Society in its corporate 
capacity, came to an abrupt conclusion by the dissolution of that 
company through the enforcement of the " Act against Stock-jobbingV' 
but the same interests remained hostile to the bank and at last succeeded 
in obtaining the establishment of the Royal bank in 1727. 

It is a common experience that those, who have a fair case, enforce 
it by bad arguments. The bank of Scotland at this period was scarcely 
doing all a national bank should have done for the trade of the country. 
But the most that could, in justice, be alleged against it was that the 
management was ultra-conservative — and if any deviation from perfection 
is permissible, this was the side on which safety lay in view of the 
currency schemes of 1702-5 and the speculation at London in 1720. 
It weakened the case of the opponents of the bank to allege that it had 
failed in its duties in refusing to lend on its own stock. This course 
was disastrous in the cases of the Darien and South Sea companies; 
and, as rightly shown by the bank, would have lessened the security 
of the public*. The reply to another charge, namely that the expenses 

1 Vide supra, 11. pp. 169-73, 186-8. J 

2 One of the inducements to subscribers in the joint-stock of a bank at Dublin 
in the summer of 1720 was the statement that shares of £100 [Scots] in the bank 
of Scotland sold for £250 [Scots]— MS. Letters of Archbishop King, Library, 
Trinity College, Dublin, N.3.7, f. 50. 

^ Historical Account of the Bank of Scotland, pp. 16-19. 
4 lUd., pp. 37, 38. 

Div. X. § 3] Capital 1695-1720 273 

of transfers were too great, brings to light interesting evidence as to the 
cost of buying and selling shares at this period. The stamp duty was 
Qs. dd. and the fee payable to the bank, by both transferror and trans- 
feree, was 20c?. sterling per share, this amounting to exactly 1 per cent. 
by each of the two parties on the paid up capital, and one-tenth per 
cent, on the nominal value of the stocks 

Summary of Capital^ Dividends and Prices of Shares^ 1699-1720. 


The capital, authorized by the act of 1695, was £1,200,000 Scots, equal to 
£100,000 sterling. A deposit of 10 per cent, was required from applicants for 
stock, which realized £120,000 Scots or £10,000 sterling. The paid up capital 
remained at £10,000 to 1720, but in 1696 a call was made for proprietors "to 
advance" or lend to the bank 20 per cent, of the nominal amount of stock they 
owned. The resulting payment of £20,000 sterling was regarded as a loan, and 
ranked for interest as such, not for dividend pari passu with the first call of 10 per 
cent. This £20,000 sterling was repaid in 1698. Again in 1704, another loan of 
10 per cent., realizing £10,000, was called up, and this was repaid in 1706. The 
share consisted of £1,000 Scots nominal or £83. 6*. 8c?., the amount paid up being 
£100 Scots or £8. 6«. 8rf. sterling. 

^ Historical Account of the Bank of Scotland, p. 38. 

^ The materials for these figures have been supplied by the courtesy of the 
Secretary of the bank of Scotland, Mr Daniel M^'Neil. I am also indebted to 
Mr J. S. Barbour, formerly accountant of the bank, for reading and commenting on 
the MS. of this Section. All quotations of the prices realized for shares were 
expressed up to 1720 in Scots currency; to give an idea of the value of the 
transactions in sterling the ratio between the Scots and sterling £ of 12 to 1, 
mentioned in the company's act has been applied. 

S. C. III. 



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The foundation and history of the institution, formed as " the Bank 
on tickets of the Million adventure,'''' but better known as " the Million 
Bank," is of considerable interest as supplementing the materials for 
information relating to the proceedings of the Bank of England. The 
latter organization had been formed to induce capitalists to furnish the 
State with a loan ; and the government debt, thus established, became 
the security for the banking business of the company. The same idea 
was acted on in 1695 by a group of private bankers, who had been in 
the habit of lending money on pledges^, with the important modification 
that the security for their credit was provided, not by a fresh loan to 
the State but by joining together a number of independent holdings in 
an existing loan. The security selected was the Million Lottery Loan 
of 1694 from which (and not as might have been expected from the 
amount of its capital) the undertaking took its title. The Million 
Lottery Loan was divided into shares or "tickets'" of .sfi'lO each, some 
of which were prize-tickets and the remainder " blanks."*"* The blanks or 
"unbenefited tickets "*"* received a dividend of 10 per cent, for sixteen 
years ; and, at the expiration of this period (i.e. by 1710), the interest 
ceased, without repayment of the principal 2. The promoters of the 
scheme did not endeavour to obtain any charter of incorporation but 
contented themselves with enrolling a deed, corresponding to a partner- 
ship-agreement, in Chancery. The terms of subscription were published 
in March 1695, and provided that intending members might contribute 
either in tickets of the Million Lottery Loan or in cash. The money 
was payable as to 10 per cent, on application, 15 per cent, within 
10 days after the first meeting and the remaining 75 per cent, in three 
calls of 25 per cent, each at Midsummer, Michaelmas and Christmas, 
respectively. It appears probable that for some years only 50 per cent. 

^ Anderson^ Annals of Commerce j in. p. 156. 

2 A History of English Lotteries , by John Ashton, p. 49, vide infra, Division x., 
Section 6. 



276 The Million Bank [div. x. § 

was actually called up. The terms on which the shares in the lottery 
were accepted, in lieu of cash-subscriptions, are of especial interest in 
view of the fact that this is the first operation on record in which a 
government security was converted into the stock of a trading company, 
and this early instance of such a transaction acquires importance from 
the similar conversions on a very much larger scale undertaken later by 
the South Sea company. Although the blanks in this lottery were of 
£\Q each nominal, they were quoted in the market in March 1695 from 
£"1 to £1. \s, per ticket. The proposal of the company was to accept 
seven tickets as equivalent to a cash payment of ,^50, so that ^49. Is., 
expended in the purchase of tickets, would secure £bO in stock. A 
discount of \0s. per ticket was allowed for prompt payment and thus 
thirteen tickets were exchanged for £100 stock. Therefore the transac- 
tion may be restated as follows — a person who subscribed ^130 in the 
lottery and failed to draw a prize, might, by prompt application, 
exchange these tickets (which would have sold for about ^91 in the 
market) for d£*100 Million bank stock. Prize tickets in the lottery 
received a varying higher rate of interest for the specified term ; and 
these, on conversion, were allowed half a year's extra purchase, i.e. about 
14| years instead of 14J. It was also arranged that the promoters of 
the scheme should receive \ per cent, on the total subscription. The 
affairs of the company were to be controlled by a body of twenty-four 
managers or committees, each of whom must hold at least ^500 stock, 
the minimum qualification for a vote was =£^300 stock, and it was 
ordained that no proprietor might have more than one vote^ It was 
also arranged, according to a contemporary advertisement, " that no one 
would be further answerable than the amount of his stock ^.^ 

The advantages of this proposal were obvious. The persons who 
owned shares in the Lottery had only a wasting investment, and both 
principal and interest disappeared in less than sixteen years. By 
exchanging their tickets for stock in the Million bank they had a 
prospect, on the success of the undertaking, of converting a terminable 
income into a perpetual one. On the other hand, the holding of a 
large quantity of the Lottery Loan by the bank constituted a fairly 
adequate, if not an ideal security, for its banking business, and one 
too which yielded the very high return of 13 per cent, on the price at 
which the tickets were exchanged into stock. 

• 1 Houghton, Collections, No. 139 ; An Abstract of Proposals for the Bank on tickets 

of the Million Adventure fBrit. Mus. ^^^'oT' "^^ j? ^^^ ^f ^^ 'Severn/ R^versionai-y 

Annuities to which the Million Bank are entitled \ A Fund for granting Annuities with 
terms for joining the Million Bank. 
2 Houghton, Collections, No, 140, 

Div. X. § 4] Million Loan Stock ''subscribed" 1695 277 

The lists for subscriptions were opened on May 24th, 1695, at the 
Out-ropers' Office, near the Royal Exchange^; and .£^200,000 was 
subscribed, on which by October .£1 00,000 had been regarded as paid 
up according to the agreement 2. On October the 31st it was announced 
that a new subscription would be taken either in money, annuities or in 
lands (the latter being a hint borrowed from the land banks) ^ The 
amount of rentals, derivable from land to be subscribed, was limited to 
^7,000 a year. At the same time it was announced that money would 
be lent, on approved security, at 6 per cent. ^ During the first year of 
the company's history it engaged in banking and in issuing annuities, 
and it was evidently considered advisable to proceed cautiously in the 
payment of dividends for, although 13 per cent, was received from the 
State on the part of the capital issued against the lottery tickets 
subscribed in 1695, a dividend of only 2 per cent, was paid for the 
period from the commencement of business to September 1695°. By 
1696 it was alleged that the management of the banking business had 
not been successful, and it was resolved on June 23rd, 1696, that " it 
was not to the interest of the society to continue banking any longer," 
and by September it was decided to cease to issue annuities ^ 

From the end of the year 1696 to 1699 the company had no very 
definite plans. It had been formed to found a bank and had given up 
the intention after a very short trial. Meanwhile the period at which 
interest on the Lottery Loan of 1694 would terminate was approaching; 
and, unless some means were discovered of earning revenue, the com- 
pany's capital would have disappeared by 1710. This contingency was 
foreseen ; and, once banking had been relinquished, the committees 
began to provide a sinking fund, out of the income received, to provide 
against loss of capital. The funds obtained in this manner, together 
with the remainder of the cash subscriptions, were invested in the 
reversions of single life annuities issued in 1693 and 1694. These 
reversions had come into existence in the following manner. One of 
the first English loans was that raised in the form of annuities on lives. 
If the applicant nominated one life only, he received 14 per cent, during 

1 Houghton^ Collections, No. 148. 

2 Post Boy, October 12, 1695. From the Postman of May 30, 1700, it appears 
that £20,000 was withdrawn, the capital regarded as paid up being for some time 
£80,000. This was twice doubled by further subscriptions. 

3 Vide supra, pp. 246-52. * Post Boy, Oct. 31, 1696. 

^ A scheme for making a fund for granting annuities for lives. . . Brit. Mus. 

33^ ^ 1 ' ^^*^ ^^^^ ^^*' ^^' ^^^^' 

« Parliamentary Papers (vol. 96 of the General Collection VJQ2-2>)— Account of 
the Transactions of the Million Bank. 

278 The Million Bank [div. x. § 4 

the continuance of that life, hence this security was known as "the 
14 per cent, annuities," or alternatively 12 per cent, on two lives 
nominated, or 10 per cent, on three lives. By subsequent enactments, 
these annuities on lives were converted into annuities for 95 years from 
1694 on additional payments of from 4 to 5 years' purchase. In some 
cases the annuitants did not pay the extra capital for the protraction of 
the term to one of 96 years, and outsiders were allowed to do so^ This 
train of events gave the Million bank its opportunity ; for, by purchasing 
reversions of the 14 per cents, out of the surplus income not paid as 
dividend, a new source of revenue would in time be formed, which would 
take the place of the Lottery Loan interest on its determination in 1710. 
There remained however one element of uncertainty, for if the bene- 
ficiaries of the 14 per cent, annuity, the reversions of which were 
purchased by the company, proved long-lived, a gap might occur 
between 1710 and the period at which a considerable part of the re- 
versions would bear income. To bridge this gap purchases were made 
of the interests of various annuitants of the 14 per cent, class, so that 
the company finally evolved a plan of building up a permanent income 
out of an interest-payment for the short term of sixteen years. This 
system also afforded advantages to persons who held 14 per cent, 
annuities, secured on the lives of others, as an investment; for, by placing 
their capital in Million bank stock, they obtained an automatic insurance 
of a moderate return on their investment and were safeguarded against 
the risk of loss through an early death of the nominee. This plan, 
having been tried experimentally for some years, a resolution was passed 
in November 1699 empowering the committees or directors either to 
purchase life-annuities, in cases where the company already owned the 
reversion^ and conversely to sell the reversions in other cases to the 
persons who owned the life-interest 2. The produce of the sales was to 
be employed at the discretion of the directors for the benefit of the 

One weak point in the scheme, as it existed in 1699, lay in the fact 
that by 1710 the sinking fund would not have had time to have com- 
pleted the redemption of the capital represented by lottery tickets, 
therefore in 1700 a new subscription was authorized. The proprietors 
had the right of doubling their present holdings (which would make the 
stock fully paid) for one month from May 30th, afterwards applications 
were invited from the public. Subscriptions might be made in annuities, 
reversions of annuities, or lottery tickets. Reversions of a 14 per cent, 
annuity were valued at £SS\ and, to secure .^'lOO stock, such a reversion 
was accepted with a payment in cash of £11. The complete 96-year 

^ Earlier Years of the Funded Debt, pp. 3-5 ; vide infra, Division x.. Section 5. 
^ Account of the Transactions of the Million Bank, ut supra. 

Div. X. § 4] Further Subscriptions 1699, 1700 279 

annuity {i.e. original life interest and reversion) was valued at £910: 
Million lottery tickets, with 11 years' interest to be paid, at £1, 5s., those 
with 10 years' currency at £6. 5s.'^ It is interesting to notice that, 
although nearly one-third of the life of the tickets had now lapsed, they 
still sold at nearly as high a price as at the formation of the company, 
and therefore almost all the investments purchased out of the sinking 
fiind would constitute profit, supposing it had been possible to sell the 
company's tickets at the price it was prepared to value them at for 
subscription. By June 14th, 1700, a further allotment of stock was 
made and it was then proposed to increase the capital to ^^320,000'^. 
Subsequently the total stock was fixed at .£500,000, at which it remained 
until the winding-up of the undertaking. 

Owing to the separation of interests in an annuity for 96 years, 
the life-interest and a reversion of another life-interest were not so 
valuable together as the single complete estate for the residue of the 
term. The Million bank gradually founded a profitable class of business 
in securing the whole annuity. Accordingly, the directors were authorized 
on July 7th, 1702, to exchange reversions for other reversions, where a 
profit could be made — in 1703 the charge for exchanging a reversion 
was £50 on each 14 per cent, annuity — and on November 3rd, 1703, 
they were empowered to sell the "absolute terms" (i.e. the complete 
annuity). On April 26th, 1704, insurances were effected on the lives 
of nominees, where the company owned the life estate only^ By 1710 
the undertaking was established at the " Million Bank House," Nag's 
Head Court, Gracechurch St., and it announced that reversions would 
be sold at o^llO and estates for life at .£100— these prices showing, 
as might have been expected, a decline in the value of the life-estate 
and an increase in that of the reversion. Exchanges of reversions were 
now made for a premium of d£*35*. 

The quotations of Million bank stock are of considerable interest 
as throwing light on market conditions at the beginning of the eighteenth 
century, and also for purposes of comparison with those of the Bank of 
England. Up to the summer of 1700 the stock was only £50 paid, and 
in the early part of the year it is occasionally mentioned in this form at 
about 23. After the increase in the capital, this company appears 
regularly in the contemporary share-lists. Being virtually an invest- 
ment-trust in government stocks such quotations supply a great want 
in the history of the finance of the period — namely that of prices of a 
standard State security, which would occupy the same position in relation 

1 Flying Post, Jan. 27, 1700; Postman, May 30, 1700. 

2 London Post, June 14, 1700. 

3 Account of the Transactions of the Million Bank, ut supra ; Postman, August 7, 1703. 
* Postman, Feb. 8, 1710. 

280 The Million Bank [div. x. § 4 

to the money-market then as Consols do at the present time. Both the 
Bank of England and the East India company earned a part of the 
dividend paid from the interest received from the government on 
the respective debts due to them, but the total dividend in each case 
was subject to the risks of trading. Besides, the price of Bank stock 
was affected (as has been shown elsewhere^) up to 1707 by the repay- 
ments of the engrafted capital, while that of East India stock did not 
become a really standard stock, from which the yield on capital might 
be calculated, until the completion of the union of the old and new 
companies in 1709. Therefore the existence of a series of quotations 
of an investment-trust in government stocks from 1700, such as those 
of the Million bank, is of the greatest importance in the exact study of 
the finance of the period. The element of trading risks is eliminated, 
and the recorded prices of the stock remain the average of those of a 
group of representative government securities. Further, there was 
considerable fluctuation in the dividends on Bank stock ; and, according 
to a statement furnished officially by the Million bank, its dividend was 
constant up to 1728, being a regular 5 per cent.^ But there is some 
doubt as to whether this statement is absolutely accurate; for, in the 
list published by John Freke during the years 1715 and 1716, the 
dividend is given at 6 per cent, instead of 5 per cent., and a comparison 
of the yields of the various securities of the period tends to confirm 
Freke*. If however, as is probable, there were slight departures from 
the regular 5 per cent, dividend, these would be in the earlier period, 
and would depend on the general return on government loans, so that 
the prices of Million bank stock may be taken as those of the average 
State security. 

In August 1700, when Million bank stock was first quoted as fully 
paid, the stock-market was favourable to holders of securities. From 
February 1697 there had been a great advance in quotations which had 
culminated in March 1700, when Bank of England stock had touched 
148 J, having almost trebled in price in three years. In August the 
quotation was from 138 to 142 and in the same month Million bank 
stock was dealt in at 97. From 1700 to 1707 the money-market was 
affected by a combination of unfavourable circumstances. At the end 
of 1700 there was the dread of foreign complications, in February 1701 
a run on the Bank of England, in 1702 came the outbreak of war, 
in 1704 another drain on the cash of the Bank of England, and the 

■ 1 Vide supra, pp. 214-24. 

2 Account of the Transactions of the Million Bank, ut supra ; Anderson, Annals, 
III. p. 157 ; The Stocks examined and compared, by William Fairman, p. 53. 

' The Prices of the Several Stocks, Annuities, and other Public Securities, London^ 
1715-16; for a specimen of this list vide Plate I. of this vol. 


Div. X. § 4] Prices of Stock 1700-5 281 

strain of the war began to be felt through a greater scarcity of capitals 
These causes, all tending towards stringency in the money-market and 
the insecurity of capital, co-operated in depressing the price of Million 
bank stock. From the quotation of 97 in August 1700 there was an 
almost continuous decline until 1707, interrupted temporarily by occa- 
sional favourable news from the seat of war. By the end of 1700 the 
stock had fallen from 97 to 79. The run of February 1701 caused a 
further fall to 61 ; and, by May 14th, the stock was as low as 59. 
From July to the end of October quotations varied between 65 and 59, 
falling in November to 58 and in December to 57— a decline in a year 
and a half of 40 or of over 41 per cent. This was the lowest recorded 
price of Million bank stock. In 1702 the quotation remained low till 
June the 10th ; and, from the beginning of the year till that date, the 
extreme fluctuations were between 58 and 60. From the middle of June 
till the end of the year the price rose, with a few relapses, and closed in 
December at 77, a gain of 20 in a year. The lowest quotation of 1703, 
namely 73, which was recorded on February 24th, was but little below 
the highest of the former year and 77 was reached by April 21st; and, 
from that date till September, the stock advanced steadily closing at 94, 
this was the best price from 1701 till 1715. Towards the end of 1703 
and during the first months of 1704, the quotation was lower, varying 
from 84f to 87J until February 23rd. In the last week of February 
there was a slight rise in the stocks of both the Bank of England and 
the Million bank, and from February 28th to March 1st both touched 
the highest prices of the year, the latter standing at 91 f . For the next 
nine weeks the price was steady above 90, but in June there was a faU 
to 86^. By August 11th the quotation was again over 90, and it 
remained between that price and 88 until the dividend was deducted on 
September 29th, when 85^ is recorded. During October the stock was 
lower, and on the 30th the lowest price of the year, 82, was touched. 
Although in 1704 the quotation had not been as high as in 1703 the 
average was better, as the lowest point in the earlier year had been only 
73. There was a recovery in November and December, and the closing 
price was 85, repeating that current at the end of September. In 
October 1704 the uncertainty of the monetary outlook had exercised 
a depressing influence on the money-market, and the after effects of the 
crisis were apparent in 1705. The highest price of Million bank stock 
for that year was recorded early in January, namely 85, and afterwards 
there was a fall until 79 was quoted on March 16th. In spite of the 
war and the frequent shocks to credit, it was a satisfactory sign of 
the soundness of the national finance and the feeling of confidence in 
the Million bank as an investment-trust that the lowest price of 1705 

1 Vide sujyra, pp. 216, 217. 

282 The Million Bank [div. x. § 

was the same as the highest in 1701. By April 2nd the stock was ai 
80, and it rose to 82 J on the 13th. There was a gradual fall till thej 
beginning of July, when 80 was again quoted. By August 31st ihi 
price was once more 82|-, and 83 was reached on October 17th an< 
84 on November 16th, the price at the end of the year being 83 J. Th< 
chief point of interest in quotations for 1706, which varied from 86 
to 78, is the contrast of this comparative steadiness with the great 
fall in Bank of England stock. The state of trade was very bad, and 
towards the end of the year many merchants failed^. This depression 
and the resulting suspension of credit caused Bank of England stock 
to fall from 91 in February to 76J at the end of October — a total of 
14|. During the same period the fluctuations in Million bank stock 
did not exceed 8, and the lowest price of the year was 78. The mean 
between the extreme quotations of the two stocks respectively was 
nearly the same — being 83| in the case of the Bank of England and 
82 in that of the Million bank. Although the fall in Bank stock 
had been greatest, this security showed greater elasticity in recovering 
than that of the Million bank. The latter fluctuated in 1707 from 
8^ to 77, giving an average price of 80, and in 1708 from 83 J to 78, 
or an average of 80|. Thus in the four years from 1705 to 1708 the 
highest price was 86 and the lowest was 77, giving averages for 1705 of 
82, for 1706 also 82, for 1707 80 and for 1708 80|. Against an 
extreme variation of 9 points in this period in Million bank stock, that 
of the Bank of England had fluctuated no less than 44 points, from 
120J to 76i. 

After the period of comparative steadiness in Million bank stock 
from 1705 to 1708, a fall began again in 1709 which culminated in 
1711. The largest fluctuations occurred from January to May in 1709 
when the stock opened at 77 — a fall of 3 from the price current in the 
previous July. Fears of a French invasion accentuated the relapse in 
price, and the stock touched 73J on May 6th, the lowest quotation of 
the year. Then came news of the De Torcy peace negotiations^ ; and, 
on May 24th, 81 1 was recorded, this as it turned out being the best 
price of the year. Till the end of 1709, the stock lost ground, falling 
gradually to 75 in the last fortnight of December. The relapse was 
continued till the middle of January 1710, when 73 was quoted from 
the 9th to the 20th. In spite of the trial of Sacheverell and the riots it 
occasioned on February 28th, the stock rose during that month, probably 
on early information that France had made overtures for a conference to 
arrange terms of peaces On March 1st Million bank stock was quoted 
at 79, the highest price of the year. Gradually it became known that 

1 Boyer, Reign of Queen Anne, p. 212. 

2 75^^.^ pp^ 376-82. 3 ii^id,^ p. 450. 

Div. X. § 4] Prices of Stock 1706-13 283 

the peace negotiations were not likely to succeed, the health of Anne 
occasioned uneasiness, and there were evidences of Jacobite activity. 
These causes and more especially the latter, since it was feared that 
the restoration of James would be followed by the repudiation of the 
national debt, exercised a prejudicial influence on the price of public 
stocks. That of the Bank of England fell to 95| in November and 
while it rallied, Million bank shares continued to fall, touching QQ\ in 
December. The time had now come when interest on the Lottery Loan 
tickets lapsed, and it may have been feared that the Million bank would 
suffer. The same causes continued to depress the quotation until the 
beginning of September 1711, when 58 was recorded. This was the 
lowest price, not only of that year but since 1702. Comparison of 
the average price of 1711 with that of the period from 1705 to 1708 
shows the magnitude of the fall. In the earlier interval the average 
quotation was from 82 to 80, whereas in 1711, it was only 62 J, or a loss 
in less than three years of nearly 25 per cent. 

October 1711 marked the turning-point in the period of depression 
that had set in since 1710. The stock was quoted in that month at 61 
to 61 J ; and, on December 7th, 62 was recorded. In January and 
February 1712 the price was from 61 to 61^, but early in March, for 
reasons that led to a similar improvement in Bank of England stock, 
there was a sharp rise — 69 being quoted on the 6th, a gain of 8f in less 
than a fortnight. This was the highest point of that year. Towards 
the end of the month householders in London were greatly disturbed by 
exaggerated reports of the barbarities charged against " the Mohawks,"" 
which were alleged to have a political origin ^ These rumours became 
so general that business was impeded and the recent advance in Million 
bank stock was lost, 60, the lowest price of the year, being recorded by 
the end of the same month. During April the stock remained flat, but 
in May there was a rise to Qb on the 16th and to 67 on June 7th. On 
July 11th 68 J was quoted. In August the price was about 67 and on 
September 19th m\. The latter figure was maintained after the deduc- 
tion of the dividend ; and there was a gradual improvement, in view of 
the approach of peace, during the remainder of the year. By November 
21st the stock was again at m^ and by December 26th it was 69. This 
quotation was repeated on January 2nd, 1713, and afterwards the price 
fell away to 67 on February 13th (that being the lowest of the year) 
recovering to 69 on March 6th. Again there was a slight relapse, and 
69 was recorded on May 22nd. Afterwards the stock rose steadily, 

1 Boyer, Reign of Queen Anne, p. 550. They were said to have " in an inhuman 
manner, without any provocation, assaulted and wounded those they met in the 
streets, slitting or flattening peoples noses, gagging or distending their mouths with 
iron instruments, and committing many other extravagant cruelties." 

284 The Million Bank [div. x. § 4 

reaching 87J on December 4th. This was the highest price of the year, 
and showed a total gain since February of 20J — the widest fluctuation 
since 1701. The total rise since 1711 was 29f or nearly 52 per cent. 

The early part of the year 1714 was rendered memorable by a crisis 
caused by a false report of the death of Queen Anne. Million bank 
stock suffered from the general fall. It had been 84 early in January, 
and by April 10th it was as low as 78f. Once the feeling of nervous- 
ness had been overcome and it was believed that the succession would 
be peaceable, the. quotation advanced; 80 was recorded on April 16th 
and 90 by September 13th. At the end of the year the price reached 
93f , thus for the first time in ten years being above what might be 
considered par for the securities originally subscribed. In the first half 
of 1715 the rise continued, and 100 was reached on May 13th, and this 
quotation was maintained till the end of the month. Soon afterwards 
the deduction of the dividend made the price appear lower, and in the 
autumn the possibility, and later the actuality, of the Rebellion inter- 
rupted the advance in prices that had continued since 1712. By 
November 10th the quotation was 88, on the 11th it fluctuated from 
88J to 88J. Then, on the arrival of favourable news from the army, 
it was 89J, 89f on Saturday the 12th, rising further to 90J— 91 on the 
14th, and touching 92J on the 15th. On the 16th it was 93 to 94|, 
and 95 was reached on the 22nd. After a temporary relapse, 95 was 
again recorded on December 2nd, and 96 ^ was touched on the 6th. 
Except for a sudden advance to 98, the stock was steady about 96 for 
the remainder of the month. Allowing for the deduction of the 
dividend, the price was steady during the first quarter of 1716, 96 being 
again quoted on March 23rd. 

In April 1716 the rise that had been interrupted by the Rebellion 
was resumed. On the 25th of that month the quotation was 101, and 
in May it varied from 100| to lOOf. By June 11th 102| was quoted, 
and 103 on the 14th. After the deduction of the summer dividend, the 
price was 96^ on June 25, and from that date dealings do not appear 
to be recorded till January 1717, when the stock was 108 ex dividend. 
By the middle of March it had lost 4, the price, which was the lowest 
of the year, being 104. This fall had been recovered by April 19th, 
when 106 is again quoted. There was a remarkable rise during the 
remainder of the year. The stock advanced as much in a month as 
it had gained or lost in the whole year of 1708. Thus in May the gain 
was 5|, from 108 to 113 J, and almost the same amount in July, when the 
improvement was from 114, ecu dividend, to 119. By December 20th 
the quotation was 124, an advance of 20 in the year. In 1718, although 
the gain was much less — being only 2 to 126, the highest price of the 
year — the stock was steadier, for the extreme fluctuations were from 

Div. X. § 4] Prices of Stock 1714-20 285 

that figure to 118 or only 8 as against 20 in the previous year. The 
quotation was highest in January and February, the natural reaction 
after the sustained advance since the Rebellion was accentuated by the 
tension existing between Britain and Spain. Thus the price, which had 
been \91^ ex dividend in July, had fallen to 120 by the end of August 
and 118 on October 10th. By the end of November, there was a 
slight improvement, and 119 was recorded for the rest of the year and 
on until January 16th, 1719. On January 30th the stock was 120 
and, from February 6th to the 27th, 122. The latter was the highest 
price of the year, and was 4 below that of 1718 and 2 less than that 
of 1717. By March 13th the quotation was again 119; and, after 
a moderate relapse, the same figure was recorded at the end of April. 
During May and June also (making allowance for the deduction of the 
dividend in July, August and September) the price remained about 120. 
On October 14th the stock was at 119^, but had fallen by the 30th to 
115:1 (the lowest price of the year). 

Once the South Sea scheme was mooted the position of the Million 
bank became a very interesting one. It held a large amount of the 
securities which the South Sea company was anxious to convert. Up 
to the time that the proposal was conceived. Million bank stock, as a 
general rule, had been slightly higher than that of the South Sea 
company, but on January 1st, 1720, this position was reversed, for 
on that day the latter security was \9,S\ to 128|, while the former was 
126. When South Sea stock advanced rapidly that of the Million 
bank, though improving, moved much more slowly. At the beginning 
of February it stood at 130, and on March 4th at 138, touching 140 
on the 18th. When the terms for the exchange of Long Annuities 
were announced in April it was seen that, supposing the Million bank 
converted those it owned, it would make a large paper-profit. It had 
purchased its annuities at from 14 to 15 years' purchase, and it was 
now offered 32 years' purchase. There are various reasons to favour 
the opinion that the company converted a part and held a part. Then, 
on the stock received for the portion converted, it borrowed large sums 
from the South Sea company, which it used to purchase more stocks 
The apparent profits, made by the conversion and the anticipated 
profits from the South Sea stock purchased, caused speculators to form 
a favourable opinion of the prospects of Million bank stock and the 
price rose as high as 440 in June. This was exactly the same as the 
highest price touched by East India stock at the same time, but it 
is to be remembered that the latter started at the beginning of the 
year from 200 and the former from 126. The quotation of 440 for 

1 Report of the Committee of Secrecy on the South Sea Company, Jourmils of the 
House of CommxmSy xix. p. 435. 

286 The Million Bank [div. x. § 4 

Million bank stock compares with ^QB for that of the Bank of England. 
The latter had hitherto, except on a few occasions, stood higher than 
that of the Million company, but the one had the support and the 
other the hostility of the South Sea company, and the disparity in 
the prices in 1720 shows that the absorption of the capital of the 
Million company was looked upon as likely to be on favourable terms, 
while that of the Bank of England would be less advantageous to its 

The company was remarkably fortunate in escaping from being 
involved in the collapse of the South Sea company. Evidently the 
directors had withdrawn from speculation in good time ; and, for the 
part of the annuities they had converted, they received a stock which, 
though redeemable, was not subject to depreciation in the same way 
as their terminable annuities. Up to 1728, 5 per cent, dividends were 
paid ; thereafter, for nearly seventy years, a regular payment of 4 per 
cent, was made. Out of the surplus income derivable from the annuities, 
which were not converted, additions to the sinking-fund were made, and 
by the end of the century, when these annuities were due to cease, the 
company had formed a reserve fund in excess of its nominal capital. 
On April 6th, 1796, all the annuities had been disposed of, and there 
was no reason for the existence of the institution beyond the receipt of 
the dividends paid it and the distribution of these amongst its members. 
Accordingly, a petition was presented to Parliament praying for an act 
to dissolve the society and to divide its assets. On the act being passed, 
the company was wound up, after an existence of just over a hundred 
years. During that period, by prudent management and the payment 
of moderate dividends, it had managed to save enough out of the 
high income receivable on securities where there was no repayment 
of the principal, not only to accumulate a sufficient reserve to replace 
the original capital, but to add considerably to it. Thus instead of 
the subscribed capital disappearing with the annuities in which it had 
been invested, the steady appropriations to the sinking fund with 
compound interest had created a new capital that materially exceeded 
the original one. 

The following were the investments in government and other 
stocks owned by the company at the date of its dissolution in 

1796 :— 

New South Sea annuities £40,000 



... £230,000 

... £234,000 

... £283,0001 

^ Accmmt of Million Bank stock in Parliamentary Papers, vol. 96 (of the General 

South Sea stock 

Million bank stock 

Consolidated 3 per cent, annuities 

,, 3 ,, reduced annuities 

Div. X. § 4] Capital, Prices of Stock 1700-20 


The realization of these investments left a very considerable surplus 
over and above the nominal amount of the half-million stock, so that, 
on the completion of the liquidation, the stockholders received a 
large bonus. 

Summary of Capital and Prices of Million Bank stock^. 


Prices of Stock. 


Date of highest price 

Highest and 
lowest prices 

Date of lowest price 


Auff. 21 


Dec. 24 


Jan. 1 


Dec. 10—24 


Dec. 23—30 


Jan. 21—28, Feb. 25 to April 8 




Feb. 24 


May 1—15 


Oct. 30, 31 


Jan. 5—17 


March 16 


May 24, June 3 


Dec. 3, 24 


Au^. 25 


Jan. 31, Feb. 17, July 18—28 


March 8—10 

83i— 78 

April 30 


May 24 

8l|— 78; 

May 6 


March 1—3 


Dec. 1, 20 


Jan. 10 to Feb. 6, April 4 


Sept. 5 


March 6, Dec. 26 


March 28 


Dec. 4 


Feb. 13 


Dec. 17 

93|— 78| 

April 10 


May 13—27 


Nov. 10 


June 15 

103 92 

Jan. 30 


Dec. 20 


March 8-29 


Jan. 3 — 11, February 


Oct. 10 


Feb. 6—27 

122— 115i 

Oct. 30 


about June 25 


Jan. 1 

1 The amount of the dividend has not been added in this table ; because, although 
there is ample apparent authority that the payment made was a uniform 5 per cent., 
it appears that actual distribution may have been 6 per cent, in 1715 and 1716 {vide 
supra, p. 280). If 6 per cent, was paid in these years, it would be probable, in view 
of the reduction that had then been made in the rate of interest on government 
securities, that, prior to 1715, the dividend on the whole exceeded 5 per cent. The 
reduction of the Million bank dividend to 4 per cent, in 1728, at the same time that 
the interest on certain public stocks was lowered to the same amount, suggests a 
general relation between the two sets of payments. Should this have been so, the 
5 per cent, dividend on Million bank stock would have been paid from about 1717 
to 1727, and from 1710 to 1716 it may have been 6 per cent. 


A. The Position of the South Sea Company in relation 
TO Public Finance from 1711 to 1719. 

While the South Sea company had been formed ostensibly as an 
undertaking for developing foreign trade, the real explanation both of 
its origin and collapse is to be found in its relation to the finances of the 
State, Therefore it will be convenient to deal with its history in close 
connection with the banking and financial companies, since its influence 
aflPected these more immediately than those of the group in which its 
title would lead one to place it. 

In fact the proceedings of the Bank of England and the South Sea 
company are conjoined \»dth much of the finance of England up to 
1720, and more particularly with the formation and early growth of 
the funded debt. The function of the Bank of England in aiding the 
financing of the governments of William III. and Anne has already 
been explained^ ; but, fit)m certain causes that will be detailed below, 
there had grown up a large indebtedness by the beginning of 1711 for 
which the Bank was unable or unwilling to provide, and it was in order 
to convert this floating debt into a funded debt that the South Sea 
company was incorporated. Thus at its inception this imdertaking was 
in certain respects supplemental to the Bank. 

To understand the origin of the South Sea company, it is necessary : 
to summarize briefly the beginning and the growth of the National Debt 
from 1693 to 1711. During these nineteen years England was at war 
for fifteen, and the wars proved costly. Money had to be raised, and 
this was attempted in various ways. At first, the government flntici- ■ 
pated supplies, arising out of taxes voted by Parliament by the issue 

' Vide iupra, Division z.. Section 1. 

Div. X. § 5 a] Government Loans 1693-5 289 

of tallies, which entitled the owner of them to the money raised, when 
it had been collected, with interest in the meantime. But it was not 
long before the expenditure grew so great that the payment of the 
tallies became uncertain, and they could only be drcolated or sold at 
a discount which, by 1697, was at least 40 per cent. Therefore it soon 
became apparent that additional issues of tallies would be ruinous, 
and that a time came when such issues could no longer be continued. 
Although the revenue did not show the great elasticity necessary to 
finance the war by means of tallies, the existing taxes would suffice 
to proWde interest for loans which the State was not bound to redeem 
before a distant date. The next step was to decide what fonn the loan 
was to take ; and, in a new departure of this nature, several expedients 
were open to the ministry. From 1693 to 1695 three different methods 
were adopted, all of which appealed to the enterprizing or speculative 
spirit of the time, and which were followed, with minor modifications, 
for many years. 

The first device was the "Tontine Loan" of 1693 (so called from 
the name of the inventor — Lorenzo Tonti), which was divided into 
shares of =^100 each. Eveiy subscriber could nominate a Ufe, during 
the continuance of which he received 10 per ooit. until 1700, and 
subsequently 7 per cent, on the capital subscribed was divided amongst 
the remaining nominated lives ; so that in a few years the share of those 
whose nominees were still living would be considerable. The same act 
authorized the grant of annuities on a single life at a return of 14 per 
cent, during the continuance of the life nominated. It wiU be obvious 
that the 14 per cenL single-life annuity was the more favourable 
investment; and so, of the million eventually subscribed, over 89 per 
cent, was taken up in that form. This method involved a heavy annual 
charge ; for, evai on the reduction of the payment to the Tontine after 
1700, supposing at that date all the lives nominated for the 14 per cent- 
annuities were in existence, the annual charge would be about 13 pa- 
cent. The sen-ice, required for the single-life annuities, would tend to 
decrease yearlv, wiule that required for the Tontine would be OHistant 
till the last life lapsed. The objection to the Tontine was the gambling 
element it involved, and there was also considerable uncertainty about 
the return on a single-Hfe annuitv, owing to the feet that in many cases 
infants were nominated, and in some instances the capital might have 
been paid without any return being received. The redeeming feature 
of the system, from the point of view of the tax-payer, was that, with 
the death of the persons nominated, the annual chaige would tend to 
become less and less, eventually ceasing. These wctc the original terms 
of the subscription for the single-life annuities, but in 1695 more money 
was raised, by the doing away with the single-life contingency on an 

S. C. III. 1^ 

290 The South Sea Company [div. x. § 5 a 

additional payment (which varied from 4J to 5 years' purchase) and the 
conversion of the debt into a fixed annuity for 96 years from January 
25th, 1695, of 14 per cent, on the original purchase price. The effect 
of this rearrangement was to increase the capital paid without adding 
to the interest, or in other words to lower the yield on the capital 
subscribed to a little over 8 per cent, for 96 years. Another modification 
of the same principle was effected in 1694 by the act which authorized 
the establishing of the Bank of England^ in offering 14 per cent, on 
a single life (as in the plan of 1693), 12 per cent, on two lives and 
10 per cent, on three lives. On the whole, the certain term, even at 
a lower rate of interest, was preferred to the larger but more doubtful 
percentage during the continuance of one, two or three lives and loans 
of the second type were comparatively rare. One was made in 1704, 
but the majority of annuities were for 99 years, and loans on the latter 
terms were raised annually from 1704 to 1712. 

A second and more speculative method of floating loans was by 
means of state-lotteries — a system still in vogue on the Continent. In 
1694 a lottery, for which a million was subscribed, was held 2. The 
total charge for this loan was 14 per cent, for sixteen years. The 
minimum subscription was ,^^10, on which 10 per cent, was paid 
annually, if that ticket did not draw a prize. There were 2500 prize 
tickets, the first of which would secure an income of £1^000 a year 
to the holder for the sixteen years the payments continued. In 1710 
another lottery loan was made. On this occasion the total was a 
million and a half. The prizes varied from £b to c£l,000 a year 
for 32 years on £\0 tickets; and the tickets, that failed to obtain 
prizes, received 7 per cent, for the same period. The capital raised 
by this Lottery Loan of 1710 cost 9 per cent, for 32 years, so that 
the charge for interest was low, but it is necessary to remember the 
danger involved in the encouragement of extensive gambling by the 

A third system of raising money was by means of loans, made to 
the State by the great companies. The Bank of England had paid 
ri^l ,200,000, for which it received 8 per cent., and in 1698 the new East 
India company found =£^2,000,000 at the same rate. Ten years later 
both companies consented to the reduction of the interest they received 
— to 6 per cent, in the case of the Bank and to 5 per cent, in that 
of the East India company — and at that date the total advances from 
both companies were ^^4,800,000. As compared with annuities, loans 
from these companies possessed the advantage that the capital was 
redeemable at an early date, and therefore the State was in a position 

5 and 6 Will, and Mary, c. 20. ^ 5 ^in. and Mary, c. 7. 

Div. X. § 5 a] Govermnent Loans 1694-1710 291 

to take advantage of any improvement in its credit, by securing a 
reduction of the interest on a renewal of the loan. 

Diverse as were the methods for floating these classes of loans, the 
interest-charge varied within comparatively narrow limits. Although 
the single-life annuities originally were 14 per cents, the conversion 
of these into 96-year annuities, on an additional payment, reduced the 
interest paid, on the whole capital subscribed, to about 9 per cent. 
The Tontine required 10 per cent, for seven years, and thenceforth 
7 per cent, till the determination of the last life. The loans from the 
Bank and East India company were at 8 per cent., redeemable at an 
early date. As the interest on the latter was reduced to 6 per cent, 
from 1708 in the case of the Bank and to 5 per cent, in that of the 
East India company at the same time, and since on renewal of the 
respective charters the rate was lowered from time to time subsequently, 
it will be apparent that the loans made by the companies were raised 
on the whole at the cheaper rate. But, on the other hand, allowance 
must be made for the fact that the interest received by a company did 
not constitute the whole payment made by the State for the capital 
advanced, because the privileges conferred constituted an important 
part of the transaction. Therefore the return received by a company 
consisted of interest plus certain privileges, and so the rate of interest 
alone, in such cases, would be relatively lower. So that to calculate the 
actual cost of the capital borrowed from the Bank and the East India 
company, it is necessary to form some estimate as to whether the 
privileges of the charters were likely to be hurtful or not. For cases 
might arise in which a saving of one or two per cent, interest would 
be dearly bought by the establishment of a pernicious monopoly. 
However, the loans of the Bank and English East India company 
would not be subject to this objection, since the former had originally 
no monopoly and the latter was incorporated to create competition with 
the old East India company \ Therefore, in view of these facts, the 
loans raised by these two companies were the cheapest, on the whole, of 
those subscribed in the reign of William III. 

So far, the funded debt has been dealt with rather from the con- 
sideration of the generic character of the different loans than that of 
the steps by which this capital was raised. The war, that terminated 
in the Peace of Ryswick in 1697, was financed partly by all the 
different methods mentioned, namely by the circulation of tallies, by 
the floatation of loans on annuities, by a lottery and by borrowings 
from the Bank and East India company. The subsequent four yeai-s 
of peace from 1698 to 1701 enabled the government to, at least partly, 

1 The general question as to the effects of monopolies for foreign trade is 
discussed in Part i., Chapter xxii. 


292 The South Sea Company [div. x. § 5 a 

set its house in order, by l-educing the excessive circulation of tallies, 
and by the end of 1701 nearly .^700,000 of the debt had been repaid. 
However, the respite was too short to enable this operation to be 
completed ; and the country was again at war before the repayment 
of the tallies, engrafted into the capital of the Bank of England, 
was ended \ 

The war, which began in 1702 and continued till 1713, proved not 
only long but also costly. The financing of it was carried out in a 
similar manner to that already noticed, namely by loans on annuities, 
by lotteries and contributions from the Bank and the East India company. 
The government had the advantage that there was now a financial 
institution, i.e. the Bank of England, able to gather in capital and to 
provide for temporary indebtedness, or to place permanent loans on 
more advantageous terms than had been possible prior to 1694. On 
the other hand, the fact that these two companies were now established 
meant that neither would be in a position to provide as much money 
for the government as they had found before 1700, when the loans from 
both together amounted to .^3,200,000. Indeed, during the French 
war from 1702 to 1713, the capital they lent, as forming part of the 
permanent funded debt, was only <£^1 ,600,000, or exactly half the sum 
provided during the earlier period. Therefore, the financial position 
of the government after 1702 was a somewhat difficult one. The war 
expenses were very large, and a considerable portion of the revenue had 
been pledged for the service of the existing loans. At first, the pressure 
of the war was not seriously felt by the tax-payer, and loans were raised 
without any very great difficulty. In 1704 a loan on annuities for 
lives was floated, which provided over a million and a half, and in the 
following year this loan was converted into one for 99 years at 15 years' 
purchase on the income, or in other words at a little less than 6f per 
cent, interest. Other annuities for a similar term were issued annually 
till 1711 at varying rates between 6| and Q\ per cent. By the end of 
October 1704 the scarcity of capital began to be felt ; and, as already 
shown, there was a run on the Bank of England ^ In 1705 and 1706 
the situation was sufficiently serious to compel the Bank to pay a less 
dividend than the interest it received on the government debt, and 
in the whole of the latter year the stock was below par. The stringency 
of the money-market in 1706 was accentuated by the issue of an annuity 
loan for over two and three-quarter millions, and also a foreign loan for 
a quarter of a million to Prince Eugene ^ Although during 1707, 1708, 
1709, the money-market was easier, there were still very grave con- 
siderations affecting the minds of the owners of capital. Renewed 

* Vide supra, pp. 214-24. ^ p^j^ supra, p. 220. 

^ Luttrell, Brief Relation, ut supra, vi. p. 9. 

Biv. X. § 5 a] The National Credit 1702-10 293 

Jacobite activity had become an important factor in the situation; and 
the anticipation, that the success of James would mean the repudiation 
of the existing debt, made it exceedingly difficult to raise money in 
sufficient quantities. This cause, together with the uncertainty of the 
succession to the Crown and the dismissal of the Whig ministry, 
exerted a most depressing influence in 1710, and Bank stock again fell 
below par. 

By the end of the year 1710 the financial condition of the country 
was very critical. Although its credit was perhaps better than from 
1693 to 1697, permanent loans could not be effected to the amount 
required ; and there was a very large floating indebtedness, which was 
then estimated at about 6f millions ^ The Bank of England had 
proved itself serviceable in negotiating Exchequer Bills, but the 
remaining obligations of the government of this nature were only 
saleable at a large discount. Army debentures, for instance, one of 
the best of these securities, never reached par from 1704 to 1710, the 
highest price being no more than 93 J, while the lowest was 72 2. Other 
debts, that had no fixed fund allocated for the payment of interest, 
sold at lower prices, and the State was unable either to pay the principal 
or to guarantee interest. Add to this, that the war was not yet ended 
and that the administration of Harley was not popular with the monied 
men, and it will be seen that the problem the government had to face 
in 1711 was one of exceeding difficulty. 

The financial situation at that time might be illustrated by that of 
a person, who has incurred large liabilities and who had secured the 
capital he required by mortgaging his property. After pledging his 
income, he still finds that he is committed to further disbursements and, 
if these cannot be avoided, he examines his assets to discover whether 
any remain upon which money can be raised^. Just in the same way, the 
government at the end of 1710 and in 1711, having reached the limit of 
taxation and having assigned the income from the customs and other 
revenues, was searching for some security, as yet unpledged, which would 
enable it to finance the unfunded debt. The two great companies could 
not be induced to add to the loans they had already raised, and the 
question suggested itself whether any grant of incorporation for a new 
trading company could be proposed as a security. The years 1710 and 
1711 had been fruitful in schemes for insurances ^ and it is possible that 

1 Journals of the House of Commons , xvi. p. 493. 

2 Vide infra, Division xii., Section 3. 

3 A similar metaphor was used in 1720, when the financial administration from 
1688 to 1719 was compared to the conduct of "an extravagant heir to a great 
estate"— Considerations on the Present State of the Nation as to Publick Credit, Stocks, 
the Landed and Trading Interests, London, 1720, p. 10. 

* Vide infra, Division xi.. Sections 1 and 3. 

294 The South Sea Company [div. x. § 5 

the foundation of a chartered insurance company might have provide 
a considerable sum for the exchequer by way of loan. In foreign tradi 
the time was past for monopolies of the commerce with any Europeai 
country. Exclusive grants were already in existence which convey< 
the trade with Africa, India and certain parts of North America. Thei 
remained only the Pacific Ocean, which had hitherto been exploited by 
Spain. The marauding and buccaneering expeditions from the time of 
Elizabeth had raised very high expectations of the commercial possi- 
bilities and more particularly of the mineral wealth of South America 
(which was described as "the inexhaustible fountain of treasure^"), and 
now that Britain was at war with Spain an excuse was offered for the 
legalising of privateering by the sanction of a company formed to trade 
into this area. 

Though the formation of a National Insurance office had been pro- 
posed in 1711, from which it was calculated the State would benefit 
to the extent of over <5^1,000,000 annually 2, it was eventually decided 
that a company for the South Sea trade should be incorporated. The 
next point to be settled was how the charter could be made the means 
of freeing the State from its most pressing embarrassments. Two courses 
in fact were open, either a company might be incorporated on the same 
lines as the Bank and East India company, the share-capital of which 
could be lent to the government. In this way, capital would be pro- 
vided, but at the same time the floating debt, which was all the time 
growing, would be still unprovided for. Another method of utilizing 
the promise of a charter, as security, would be to adopt the procedure 
of the Million bank^ and Sword Blade company*; namely, instead of 
seeking a fresh loan, the government might incorporate the owners of 
existing loans, and the grant of the trading privilege would be available 
to induce such persons to accept a lower rate of interest than would 
otherwise be possible. In short, the monopoly of the South Sea trade 
was the bait that tempted people to consent to the funding of their 
share of certain debts, on an insufficient guarantee of interest which they 
would not otherwise have entertained. 

Harley, having decided on this plan of financing the unfunded debt, 
proposed to the House of Commons that it should be adopted on 
March 10th, 1711, and on May 3rd the necessary resolutions were 

^ A Letter to a Member of Parliament, on the Resolution of the House to settle a 
Trade to the South Seas of America, 1711, in Somers' Tracts (1748), 11. p. 399. 

2 A Proposal for raising great svms of money all ever Great Britain, for the use of 
the Government, by George Osmond, 1711, reproduced in The Early Days of the Sun 
Fire Office, by Edward Baumer, London (Sir Joseph Causton), 1910, pp. 14, 15. 

3 Vide supra, Division x.. Section 4. 

* Vide infra, Division xii.. Section 3» 

Div. X. § 5 a] Unfunded Debts ''subscribed'' 1711 295 

passed'. The immediate effect of the acceptance of the scheme was to 
raise the quotation of Navy Bills (which were to be subscribed into the 
capital of the new company) by 20 per cent.^ There was some delay in 
the final incorporation of the company, owing to the stabbing of Harley 
by the Marquis de Guiscard^, and at length a charter of incorporation 
was signed on September 8th, the necessary act of Parliament having 
been previously passed^ The act, 9 Anne, c. 21, provided that such of 
the proprietors of the floating debts, who were willing to assent to the 
scheme, should have the right of being incorporated in a company to be 
formed to trade to the South Seas, receiving stock of that company 
in exchange for their present securities. The debts, to be converted 
amounted to ^9,471,325 ^ on which, should all be subscribed, interest 
at 6 per cent, was payable, secured on the duties on wines, vinegar, 
tobacco, East India goods, wrought silks and whale-fins. As these 
revenues had been allocated to other purposes for some years to come, 
until they were available the interest was to be made good by the 
treasurer of the Navy. Like the East India company and the Bank, 
the South Sea company was to receive a stated sum to defray its office 
expenses, amounting to an additional .s£^8,000 a year. The act also 
authorized the grant of a monopoly of trade on the east of South 
America, from the river Orinoco to the south of Terra del Fuego, and 
along the whole of the west coast. The company might also trade in 
any place or places within three hundred leagues from the west coast. 
The monopoly was expressly stated not to apply to any possessions of 
the Dutch or Portuguese, which were to remain open to all English 
traders. It was also provided that the Queen might direct in her 
charter that a capital, amounting to one per cent, of the whole stock, 
should be set apart and employed in fishing. 

These ideas were embodied in the charter which incorporated ''Hlie 
Governor and Company of the merchants of Great Britain, trading to 
the South Seas and other parts of America, arid for the encouragement 
of the Jlshing.'" The privileges granted were similar to those of other 
important undertakings, incorporated in the reigns of William III. and 
Anne. The direction of the affairs of the company was in the hands of 
a governor, a sub-governor, a deputy -governor and 30 directors. The 
qualification of the governor was X^5,000 in stock, and that of a director 

1 Journals of the House of Commons, xvi. pp. 541, 626. 

2 Swift, Works {Faulkiner's Edition), ix. p. 95. 
2 Ibid. ; Boyer, Reign of Queen Anne, p. 493. 

^ Court Books of the South Sea Company— British Museum Add. MS. 25,494 et 
seq.. Court Boole i., f. 7. 

^ Estimate of the Debt of her Majesty s Navy, 1711, in Somers' Tracts, ii. p. 87; 
Some Reasons offered by the late Ministry in Defence of their Administration, 1715, p. 49. 


296 The South Sea Company [div. x. § 5 a 

d£^2,000. Members of the company, who were in arrear in paying any 
call, might not transfer stock nor receive dividends, without the consent 
of the directors ^ J^ 

The total debts subscribed, consisting of unprovided-for Army, ^ 
Navy, Ordnance, Victualling and Transport debt as well as wages due to 
seamen, loans in anticipation of duties and subsidies to the Elector of 
Hanover and Duke of Zell, amounted to c^9,l 77,967. 15*. 4tZ. By 
1715 the interest for that year was unprovided for and by the act 
1 George I. (Stat, 2) c. 21, this deficiency, as well as certain other sums, 
amounting in all to .£^822,032. 4*. 8c?., was added to the existing capital, 
making a total of c£^l 0,000,000. Thus, the company began its career 
with a capital of over nine millions, which was soon afterwards increased 
to ten millions. This was a huge sum for the time. It was considerably 
larger than the combined stocks of the Bank, the East India and African 
companies. Such a capitalization was in itself an element of danger. 
The directors could borrow very large amounts on the security of the 
government debt of ten millions, such borrowings constituting the 
trading or working capital of the undertaking, as distinguished from its 
share capital. For ninety years the original East India company had 
managed to develope a trade on an average paid-up capital that certainly 
did not exceed ^^400,000^ The South Sea company could find one of 
ten or, possibly, twenty times as much. Even if it had been able to 
prosecute the Pacific trade, it could not employ to advantage its total 
borrowing powers in building up the industry which it was incorporated 
to foster. Therefore, it had a very large surplus of credit, which the 
directors might be tempted to employ in other directions. It is true 
that they did not give way to this temptation till 1719, but it is 
important to recognize that the catastrophe of 1720 was contained in 
embryo in the very inception of the company. 

Scarcely any one foresaw this danger. The Tories, after being dis- 
appointed in the Land bank, and having suffered from the dominance of 
the monied men in the Bank of England, had at length in the language 
of the time "a fund of credit*" of their own, and there is scarcely any 
limit to the praises which the scheme received. Swift, for instance, 
writing as a partisan, stated that the restoration of the credit of the 
Navy effected a saving of more than cent per cent in the Victualling 
department, and that loans were placed with much greater facility after 
the formation of this company ^ 

To grasp adequately the whole future position of the company's 
finances, it is necessary to remember that stock was issued at par, as 

^ Abstract of the Charter, in Court Book, i., f. 7. 

2 Vide supra, ii. p. 177. 

3 Swift, Works, ix. pp. 4, 96. 

Div. X. § 5 a] The true Par of the Stock 1711 297 

against the par value of the various debts incorporated. But these debts 
liad been long at a great discount in the stock-market. Therefore, sup- 
posing a person to purchase, say Navy Bills, to exchange into South Sea 
stock, he would receive a larger amount of stock than the cash he paid 
for the Bills or other security subscribed. Some measure of the depre- 
ciation of these debts may be found in the fact that, when South Sea 
stock was put on the market in October 1711, it was first quoted at 
73 to 76, and during the last quarter of the year it varied from 71 J 
to 82. Since the average of both sets of prices is about 75, this figure 
may be taken as representing the value put on the obligations sub- 
scribed, plus the advantages of incorporation with the monopoly of the 
South Sea trade. Swift states that the proposal to establish the company 
had brought about a rise of 20 per cent, in some of the securities 
subscribed, but in all probability the appreciation in others may not 
have been so great. If for purposes of forming a general estimate, the 
appreciation all over the subscribed obligations be taken at 10 per 
cent., this leaves 68^ as the price at which a portion of the unprovided- 
for debt might have been purchased in 1710, which would give the 
owner the right to have it converted into <^100 of South Sea stock. 
Therefore the par value of the new stock was not £\00 in cash (as 
might have been expected) but about ^^68 — a price which approximates 
to that at which tallies and bank-notes could have been purchased in 
1697 for subscription in Bank of England stock-. It follows, too, that as 
soon as the State could make good the payment of the interest on the 
ten millions and when the stock of the South Sea company was quoted 
at 100, the stockholders would have a profit of about £^9> on an 
average, or nearly 50 per cent. In other words, the par of South Sea 
stock was not =£^100 but about 68 — that being the estimated original 
cost of the securities exchanged for the company''s d^lOO of stock. It 
therefore follows that South Sea stock at 100 was really at a premium of 
nearly 50 per cent. 

It was not until May 13th, 1715, that South Sea stock reached 100— 
that is nearly four years after the formation of the company. During 
this period, and indeed until 1720, the trading prospects of the under- 
taking remained a possibility and little more. Owing to the state of 
war existing between Britain and Spain until 1713, it was not thought 
prudent to dispatch expeditions. On the signature of the Treaty of 
Utrecht, it was found that the outlet for the activities of the company 

1 Price of £100 unprovided-for debt, 1710 £68. Os. Od. 

Appreciation on announcement of the formation of South 

Sea company, 10% £6. IQs. Od, 

Average price South Sea stock, 1711 £74. 16*. Orf. 

2 Vide supi'a, p. 211. 

298 The South Sea Company [div. x. § 5 a 

in trade with Spanish possessions was not so favourable as had been 
expected, and the Assiento contract, for the supply of negroes to the 
planters in South America, gave very small scope for the employment of 
capital. The renewal of war with Spain in 1718 again made the 
voyages of the company very precarious; so that, during the first eight 
years of the company's history, its trade was almost infinitesimal in 
comparison with the great capital it could raise. 

Until' 1719 the energies of the directors were confined to making 
enquiries and occasionally equipping ships. It might have been ex- 
pected that the capital resources of the company would have been 
employed sooner in other directions ; but, on the fall of Harley's 
ministry, the undertaking, he had founded, shared in his disgrace, and 
the new government again favoured the Bank of England, so that the 
South Sea company was in the somewhat ignominious position of having 
large sources of credit at its disposal which it could not utilize. But, 
while this was so, there was an undercurrent of the events of the period 
that tended to place much business at the command of the company. 
These tendencies were partly domestic, partly foreign — the former 
arising out of the desire to reduce the interest on the national debts, 
and the latter from the reflex influence of Law's financial system in 
France ^ 

The general character of British loans has already been described. 
The government had been forced to borrow at varying rates of interest 
between GJ and over 8 per cent, from 1693 to 1711. Most of the loans, 
which were issued as annuities, had still about 90 years to run, so that 
the State had bound itself to pay a high rate of interest, when by 1719 
capital could be obtained at 5 per cent., possibly in exceptionally 
favourable circumstances as low as 4 per cent. Archibald Hutcheson, 
one of the leading authorities on the finance of the period, had proposed 
a scheme for the conversion of the debts in January 1714, and the state 
of the debt was again considered in 1717^. In the latter year Walpole 
introduced his scheme for the reduction of the redeemable debt by the 
establishing of "a sinking fund^" In the promulgation of this pro- 
posal, it was not made sufficiently clear how the money, raised by means 
of the sinking fund, would be applied. There were numerous redeemable 
debts, that is debts on which interest was payable until the State 
returned the principal lent, which might be done at any time. Walpole's 
intention was to pay off these loans, by means of the accumulations from 
the sinking fund, at the same time offering holders the option of accepting 

1 Some account of the mutual relations of the Mississippi and South Sea 
companies will be found in Part i.. Chapter xx. 

2 Computations relating to the Public Debts [1717], reprinted 1720, p. 7. 

3 Memoirs of Sir Robert Walpole , by W. Coxe, London, 179B, i. p. 108. 


Div. X. § 5 a] Schemes for Conversion of Debt 1714-19 299 

a fixed interest at 4 per cent. — in other words part of the scheme 
involved the conversion of the redeemable debt into new 4 per cents., 
dissentient stockholders being paid in cash from the surplus. What 
Walpole did not make clear was the position of the owners of annuities, 
which were the loans at most onerous rates. It was feared that the 
position of these might be tampered with, and it was necessary for 
Leechmere to assure the House that this portion of the debt "could not 
be meddled with, without breaking in upon Parliamentary engagements 
and violating the public faiths" Walpole's reply was scarcely as con- 
vincing as it should have been. He is reported to have said that "there 
had never been a design to use any compulsion with relation to the 
annuities, that indeed an alternative might be offered to the proprietors 
of them, but that it should be in their choice either to accept or refuse 
it." This declaration was reassuring, as far £is it went, but it did not 
succeed in removing the anxiety of the annuitants, and the resignation 
of Walpole was received with satisfaction by the owners of the securities 
affected. Still, although the conversion of the debt was delayed, the 
proposal had been made, and the matter became the more urgent as 
the government could effect some loans at 4 per cent, between 1717 
and 1720. 

Meanwhile the advocates of a conversion scheme had the example 
before them of Law's Mississippi company in France, which towards the 
end of 1719 had undertaken the conversion of the whole French national 
debt. Law was a Scotsman, whose name is connected with certain 
currency proposals submitted to the Scottish Parliament in 1705^^. He 
was a man of good family, accomplished and of winning manners. Like 
many other men of fashion, he had killed his opponent in a duel and 
was forced to live abroad. For some years he was best known as a 
daring gambler, and finally he arrived in France, during the regency of 
the Duke of Orleans, and soon became one of the leading personages at 
the Court. At this time the French finances were in an exceedingly 
involved condition, owing partly to the strain of lengthy wars and the 
corruption of the revenue officials. Law's first efforts, towards the 
rearrangement of the currency of the country, took the form of the 
founding of a national bank which was started in 1716^ But this was 
merely a first step, which was apparently unconnected with the next 
development, namely the amalgamation of the various foreign trading 

1 Proceedings of the House of Commons , vi. p. 114. ^ p-j^ supra, p. 265. 

3 John Law of Lauriston, in A Treatise on Money, by J. S. Nicholson, 1901, pp. 
165-207; Recherches Historiques sur le Systeme de Law, par E. Levasseur, 1864, 
pp. 44-56; Les Grandes Compagnies de Commerce, par Pierre Bonnassieux, 1892, 
pp. 275-82; John Law of Lauriston, by A. W. VViston-Glynn, Edinburgli, 1907, 
pp. 38-81. 

300 The South Sea Company [diy. x. § 5 a 

companies, which were consolidated into one great trust or combine, 
which eventually controlled the trade to India, Africa, and French 
America. In August 1719 this foreign trading company was authorized 
to offer to convert the existing government obligations into its stock, 
receiving 3 per cent, against 4 per cent, paid previously, thereby reducing 
the charge for the service of the debt by 25 per cent. Thus the same 
organization controlled the whole financial system of France and 
dictated the policy for foreign trade, thereby including under one huge 
monopoly much of the foreign commerce and most of the monetary 
transactions of France. In fact, in modem terminology. Law's company 
was the greatest trust the world has yet known, if not in capital, at 
least in the all-embracing character of its monopoly. Now it sometimes 
happens that a modern trust, which aims at a monopoly, gathers to 
itself the elements that add to its size by offers of a high price, as 
expressed in the nominal capital of the company. So it was in the cases 
of Law's and of the South Sea companies. The money value of the 
terms offered to holders of government loans, for purposes of conversion, 
was very high, but at the same time the price of the stock was greatly 
inflated. Therefore, at the market value of the stock, it would appear 
more advantageous for the holder to take stock in the company, at the 
price at which that stock was offered him, rather than be paid out 
in cash. So that in France in 1719 as in England in 1720, holders of 
government debts were not only willing but wildly anxious to take 
stock of the company, authorized to make the conversion. This part of 
the history of the Mississippi company will be found to be repeated in 
that of the South Sea company, but there is one important difference 
between the modes of conversion adopted in France and in England. Law 
carried his consolidation to the extreme point of amalgamating his bank 
with the trading companies. Having effected this object, his company, in 
its banking capacity, made excessive issues of inconvertible paper, with 
the result that the inflation, that had existed before the amalgamation, 
became intensified. In England although, as will be shown, the South 
Sea company affected the purchasing-power of money, it fortunately 
happened that the Bank of England stood firmly for the system of 
convertible paper-money, and the currency was not tampered with. 
Therefore, the price of Mississippi stock was much higher than that of 
South Sea stock, proportionately. The former was sold at twenty -four 
times its par value, the latter at ten times, so that the issue of incon- 
vertible paper in France made possible an inflation two and a half times 
as great as that existing in England. Conversely when the reaction 
came, the distress in France was much more serious than in England. 
However, in 1719, and during the earlier part of 1720, the price of 
Mississippi stock was rising rapidly. Fortunes were made with a facility 

Div. X. § 5 a] The Conversion of 1719 301 

hitherto unknown. Money was circulating freely. The charge of the 
French debt was being reduced, and it seemed that a new era of national 
prosperity, hitherto undreamt of, was dawning on France. The funda- 
mental idea of the movement was the saving and ulterior advantages, 
arising from the conversion of the national debt into the stock of a 
trading company. The course of events in France strengthened the 
hands of the advocates of a conversion scheme in England. The South 
Sea company, by undertaking this operation, could use its large surplus 
credit, and by February 10th, 1719, the House of Commons had resolved 
to accept an offer made by the company for the conversion of the 
Lottery Loan of 1710 into its stocks The method of raising money, by 
means of State-lotteries, has already been described 2, and this particular 
loan had been raised at 9 per cent, for 32 years on the million and a 
half subscribed. In 1719 there remained 23f years of the term unex- 
pired, and it was proposed by the company that 11 J years' purchase 
should be given to the annuitants in South Sea stock. Should the 
whole proprietary avail itself of this offer, stock to the amount of 
^1,721,250^ would be required to effect the conversion*. South Sea 
stock was selling a little over par in February 1719, so that the whole 
body of annuitants would gain a profit of about a quarter of a million 
on the million and a half originally paid or about 16 per cent., besides 
converting an income of 9 per cent, on the average for 23| years into 
a permanent one, subject to the advantages or disadvantages that might 
arise from the company's trading operations. From the point of view 
of the State, an annual charge of d^'l 35,000 for 23f years was reduced to 
one of 5 per cent, on the capitalized annuities, which, should they all be 
subscribed, would amount to ^£^77,625 subject to redemption. At the 
same time, the company proposed to give stock for 1 \ years' annuity in 
arrear at par, receiving 5 per cent, interest from the State. It offered 
to lend the difference between the total annuities capitalized, together 
with the arrears, and two and a half millions to the government, on 
receiving interest on an increased capital of this amount, and it was 
provided that, if the whole annuities should not be subscribed, the loan 
from the company was to be reduced in proportion. Rather more than 
two-thirds of the annuities was subscribed, so that instead of two and a 
half millions being added to the existing ten millions of capital, the 
total stock, issued to effect the conversion and that sold to provide 

1 Journals of the Home of Commons, xix. p. 95. 

2 Vide supra, pp. 289, 290. 

^ I.e. £135,000x11^= £1,552,500 

Arrears of interest, to be funded £168,750 

Total £1,721,250 

* History of the Public Bevenue, by James Postlethwayt, 1759, p. 313. 

302 The South Sea Company [div. x. § 5 a 

money to lend to the State as. agreed, amounted to £1,746,844. 8^. 10c?. 
By this operation the capital of the company was increased to nearly 
llf millions^ 

The steps taken to raise the sum of over half a million, to be lent to 
the State, are of interest in view of the operations of the following year. 
The company opened subscription-lists for the taking up of the stock 
authorized, but not issued to annuitants (which at par would have 
produced exactly the amount required). This subscription was post- 
poned till July, when the stock was at 114. Therefore the company 
made a profit of the premium on the half-million of stock issued, which 
came to .£72,8001 The facility, with which this gain was made by the 
company, suggested its policy in the larger transactions of 1720, which 
consisted not only in issuing stock in exchange for government debt, but 
in securing very considerable gains on that exchange, through taking 
advantage of the premium on the stock. As long as Parliament 
authorized the creation of South Sea stock to the par value of the debts 
converted; and at the same time, owing to the stock being quoted above 
par, the satisfaction of the holders of government debts would require 
a smaller amount of the company's stock, the balance remaining would 
constitute the profit on the transaction. From the point of view of the 
government the conversion of 1719 was equally favourable. An irre- 
deemable charge of .5^135,000 for 23f years was exchanged for a perpetual 
but redeemable one of =£77,625. It might seem at first sight that this 
involved a saving of over 50 per cent., but it must be remembered that 
the charge up to 1719 had under 24 years to run, without repayment of 
principal; whereas the new one was perpetual, subject to the right of 
repaying the principal. This redeemable character of the new obligation 
enabled the interest to be subsequently reduced, but it would scarcely 
be fair to count on this, except as a contingent advantage of the scheme, 
at the time the conversion was effected. A more accurate basis for the 
calculation of the nett saving is found in taking the "present value " of 
original and converted annuities, which would work out as follows with 
compound interest at 5 per cent. : 

£ 5. d. 

The average interest charge of the Lottery Loan of 1710 was 
9 per cent. Therefore taking an annuity of £9 for 24 years 
its ^'^ present value" would be 9 X 13*8= 124 2 

The maximum charge on the converted loan would be 4 per 
cent. Therefore a perpetual annuity of £4 would have a 
"present value" of 4x20 80 

Leaving a minimum saving in terms of "present value" ... £44 2 

1 For exact figures vide infra, Summary of Capital, p. 360. 

2 Anderson, Annals of Commerce, iii. p. 317. 


Div. X. § 5 a] Proposed Conversion of whole Debt 1719 303 

It therefore appeared that, both from the points of view of the 
State and the company, a conversion scheme on a larger scale would be 
mutually advantageous. The State could effect a reduction of the 
annual charge for as much of the debt as was converted, the company 
had prospects of making considerable profits from the operation. The 
company therefore proposed in November 1719 to convert the whole 
government debt due on annuities — this being the portion known as the 
irredeemable debt on which interest was highest — and the redeemable 
debt which included, besides various other loans, those provided by the 
Bank and the East India company \ The proposal at this stage was in 
effect the conversion of the whole national debt by the South Sea company, 
which would have involved the transference to that undertaking of the 
privileges of the Bank and the monopoly of the East India trade. So far 
in fact the scheme proceeded on parallel lines to that adopted in France; 
but, while it was in its initial stages, certain modifications were intro- 
duced which differentiated it from Law's operations. The Bank and 
the East India company were strong enough to compel the South Sea 
company to drop that part of the early form of the conversion scheme 
that contemplated the paying off of their respective capitals. Therefore, 
the proposal that was discussed, amongst a group of prominent financiers 
and the Treasury officials, provided for the conversion into South Sea 
stock of the whole redeemable and irredeemable debt, with the exception 
of that due to the two great companies. This amounted to over thirty 

It is not a little difficult to convey a clear impression of the intricate 
operations involved, because the working out of the scheme had two 
different histories. The one was open to men of intelligence, while the 
other was profoundly secret till the end of 1720. The few writers who 
have dealt in any detail with the finance of the South Sea company pass 
backwards and forwards from the open to the secret history. This 
mode of treatment must inevitably distort the perspective of the period. 
One judges the great mass of investors in 1720 in the light of informa- 
tion which was sedulously concealed from them, with the result that 
they appear to have acted with great want of foresight, sometimes with 
an utter absence of common sense. So far has this attitude of mind, 
towards the finance of the South Sea company, been carried that it is 
commonly spoken of as "a bubble," and the conduct of the stockholders 
is often characterized as "a mania," "a frenzy" or as the result of 
general madness. But it should be recognized that these, and other 
similar expressions, depend upon an implied reference to some idea of a 

1 Aislabie's speech in the House of Lords— Proceedings of the Home of Lords, ut 
supra, III. p. 174; Mr Aislabie's Second Speech in the House of Lords on Thursday, 
July 20, 1721, p. 9. 

304 The South Sea Company [div. x. § 5 

"social organism," which is a term valuable as a metaphor but not as an I 
explanation of phenomena. To speak of a national madness (which, if 
the nation is to continue, must be followed by a return to sanity) is 
merely to state that people have acted for a time unreasonably, but 
without giving any explanation of such action. Further, that a nation 
should act for a time unreasonably (as it seems to us), and a short time 
afterwards return to a normal condition shows that the faculty of 
judgment was unimpaired. How then does it come about that appa- 
rently numbers of people suffer simultaneously from an attack of forming 
wrong conclusions, on matters in which they are vitally interested? 
The answer appears to be that, in the spring and summer of 1720, 
men formed their opinions on certain evidence, which was not the whole 
evidence. On the contrary, information, that would have led to an 
opposite conclusion, was concealed from the public. Therefore, it is 
not impossible that the investor of 1720, so far from being subject to 
"frenzy" simply decided his action, possibly too optimistically, but still 
on the whole rightly, from the data before him. What makes his 
conduct appear to be illogical is that we have many of the facts avail- 
able, and do not recognize that the part concealed at the time was the 
more important; and, had it been known, it would have caused the 
public to act in precisely the opposite way to that in which it did. 
Therefore in the following account, in order to show the train of causes 
and events, not as they were, but as they appeared to the men who were 
affected by them from day to day, the South Sea scheme will be dealt 
with as it showed itself to the public, and subsequently the account of 
it will be corrected in view of the secret history that underlay and 
reversed the whole tendency of things as they appeared to be in 1720. 

To take then first of all the conversion as it was worked out and as 
it appeared (not as it really was); the early negotiations in November 
1719 were not disclosed, and it was not until January 1720 that the 
South Sea company came forward with a definite proposal for the con- 
version of the debt. This scheme affected the whole debt, except that 
due to the Bank and East India company. These debts were estimated 
to amount to .£^30,981,712. Qs. Q\d. and consisted of redeemable and 
irredeemable loans. The latter were of two kinds, first the long 
annuities of 99 and 96 years which were to be capitalized at 20 years' 
purchase, and secondly the short annuities to be capitalized at 14 years' 
purchase. The authorized capital of the company was to be increased 
by d£*100 stock for every £100 of debt subscribed on this basis; or in 
other words, if the whole of the debt were exchanged, the capital would 
be increased by nearly thirty-one millions. The company offered to J 
consent to the reduction of the interest, payable to it by the State, from ^ 
5 per cent, to 4 per cent, after 1727. Therefore, supposing the whole 

Div. X. § 5 a] Scheme to reduce Interest 1720 305 

loans to have been exchanged into South Sea stock, there would have 
been a saving in the annual interest of ^£'305,030. 14^. M. after 1727 ^ 
to which is to be added a reduction of 1 per cent, on the existing capital 
of d^ll,746,844. 8,9. \0d. The company also proposed to pay the sum 
of .^'3,000,000 to the State for the privilege of effecting this conversion. 
This amount could have been used in discharging an equal amount of 
the debt due to the company, and it was therefore equivalent to an 
additional saving, at 4 per cent., of .£'120,000 annually. The following 
statement will show in a tabular form the total proposed benefits of the 

Table showing saving to the State after 1727 bi/ the first offer of the 
company for the privilege of effecting the conversion of the 
National debts. 

£ 8. d. 

Interest on £30,981,712. 6*. 6|d (at various rates) ... 1,544,299 4 2 

y> i, iy at 4% after 1727 ... 1,239,268 9 9 

305,030 14 6 
Add saving by reduction of interest on £11,746,844. 8s. 10c?. 

by 1% after 1727 117,468 8 10 

Annual saving on £3,000,000 at 4% 120,000 

Total reduction in annual charge after 1727 £542,499 3 3 

On January 22nd Aislabie proposed the adoption of this proposal in 
the House of Commons. He endeavoured to show that, by the addition 
of the sums saved annually to the sinking fund, the whole debt would 
be extinguished in 25 years 2. An attempt was made to rush the pro- 
posal through the House, but there was a strong party which supported 
the claims of the Bank of England, representing that this institution 
had rendered great and eminent services to the government in the most 
difficult times and that, if any advantage was to be gained by the 
conversion, this company deserved to be preferred before one "that had 
never done anything for the nation'."" The Bank came forward with 
an offer of five millions capital and an earlier reduction of interest to 
4 per cent.^ On the 27th an opportunity was given the South Sea 
company of amending its first offer, and the Bank, knowing that certain 
prominent members of Parliament were disposed to favour its rival, 
also handed in a second tender. Both of these were considered on 
February 1st. 

The Bank offered to make a capital payment, proportionate to the 
debts converted, which on the whole amount was estimated to reach 

1 Journals of the House of Commons, xix. p. 247. 

2 Coxe, Walpole, ut supra, u. p. 182. 

3 Proceedings of the House of Commons, ut supra, vi. p. 213. 
* Anderson, Annals of Commerce, iii. p. 323, 

s. 0. III. 20 

306 The South Sea Company [div. x. § 5 a 

d6*5,700,000 ^ This proposal differed from that of the South Sea 
company, in so far as it provided in precise terms the ratio of the 
exchange of stocks — for instance the holder of each long annuity was to 
have the right of converting it into Bank stock at 17 years'* purchase, 
and proportionate offers were made to the proprietors of the other 
classes of debts. Bank stock in February was about 150, and therefore 
this scheme was equivalent to an offer of 25 years' purchase in cash. It 
had the great merit of determining the position of the owners of govern- 
ment stocks; and, by accepting the scheme of the Bank, Parliament 
would have done something towards safeguarding its creditors. 

The second proposal of the South Sea company gave no information 
as to the terms to be offered to the annuitants and owners of redeemable 
debts, but it provided for an increased payment to the State, which was 
to be calculated on the following basis. A payment of about 25 per 
cent, of the nominal amount of the redeemable debt was to be made, 
which was fixed at ^^4,156,306. 4*. lid. Then, on all the irredeemable 
debts actually subscribed, the company would pay 4 J years' purchase: 
and, upon those that were not subscribed, one year's purchase. Thus 
the total amount, accruing to the State had all the loans been converted, 
would have been nearly seven and three-quarter millions, or over one 
hundred and fifty per cent, more than the first offer. As the scheme 
actually was realized, the company was indebted to the State, by the 
terms of this proposal, to the extent of .£^7,1 34,906. Os. 4f<i.^ 

In the temper of the Parliament early in 1720, there was no dispo- 
sition to protect the owners of public securities, beyond the insisting 
that there should be no compulsory conversion. For the rest, "in the 
putting of the nation up to auction," the highest offer was accepted. 
This was that of the South Sea company, which promised, besides a 
reduction of interest in 1727, a minimum payment of nearly five millions, 
which, on the complete success of the scheme, would be increased auto- 
matically up to about seven and three-quarter millions ^ 

Between the acceptance of the company's proposals and the passing 
of the act 6 George I. c. 4 which ratified them, the stock advanced veiy 
greatly. During the month of February ^the price fluctuated between 
129 and 184, and in March from 172 to 380. The explanation of this 
rise of nearly 300 per cent, in two months is not far to seek. The 

* A Collection of Calculations and Remarks relating to the South Sea Scheme and 
Stock, by A. HutchesoDj p. 19. 

2 Postlethwaite, History of the Public Revenue, p. 317. 

3 In another form the position might be expressed as follows. The company 
bound itself to pay over four millions on the whole redeemable debtj also one year's 
purchase on all annuities. In addition it was to pay an additional three and a half] 
years' purchase on such of the annuities as were actually converted. 


Div. X. § 5 a] Issued and issuable Stock 1720 307 

company had been authorized to convert the debt, the ratio of debt 
it was to receive from the government was fixed, but the ratio of stock 
it was to give in exchange for the existing loans was not fixed. There- 
fore, as long as the present stock was quoted above par, the company 
was in a position to offer less stock to owners of loans than it received 
in the converted debt, and the difference between the capital so isstied 
and the total capital issiuible would constitute its profit in surplus stock. 
Further, as the market price advanced, this surplus stock would become 
more valuable, and so, as investors realized the possibilities, the 
quotation rose. Besides this speculative argument for the advance in 
price, there was the advantage that would accrue to the company by 
the organization of an enormous capital, which might eventually 
amount to forty millions lent to the State, upon which large sums 
might be borrowed. Not only were there alluring prospects from 
the South Sea trade, but the mere fact of so large a working capital, 
under prudent organization, would render the greatest enterprizes 
possible \ Further, the close relations of the company and the govern- 
ment must not be lost sight of; so that, in any venture which required 
the assistance of the State, the most powerful support might be counted 
on. In March and April no one could estimate exactly the value of 
these various considerations, since the profits on financing the con- 
version depended on the excess of issuable over issued stock, and the 
amount of issued stock depended on the quantity of loans exchanged. 
While the surplus of stock was altogether hypothetical, it was plain 
there would be a very considerable profit in stock, and this became 
more valuable as the price rose. 

Thus, when the directors considered on what terms they would 
offer to convert the loans in April, everything appeared favourable 
for the success of the scheme. During the first fortnight of that 
month the stock was very steady, being mostly a little over 300. It 
was decided that the first subscription should be opened on the 14th, 
and on till May 19th there was a time of great activity in the sale 
of stock and the taking of subscriptions for the conversion of annuities. 
Since the operations in April and May constitute a group by them- 
selves, it will conduce to a more ready appreciation of an intricate 
situation if these are treated separately. 

1 An Examination and Explanation of the South-Sea Company's Scheme for Taking 
in the Publick Debts: Shewing that it is not encouraging to those who shall become 
Proprietors of the Engrafted Stock, to Join with the present Proprietors of the Company 
at any advanced Price , 1720, p. 27. 


308 The South Sea Company [div. x. § 5 b 

B. The First Group of Issues of Capital and 
Conversions, April — May, 1720. 

The act authorizing the financial transactions of the company was 
designed (as has been shown) for the conversion of the national debts. 
It is therefore surprising that the directors, instead of first offering to 
convert some portion of the debt, determined to make an issue of two 
milhons stock at 300. In doing this, they were in reality selling stock 
which was expected to accrue from the conversion, but which, until 
that conversion had been effected, was not available, and which it was 
possible might never be available. Supposing the premium on the 
stock had disappeared, there would have been no surplus stock to issue, 
and therefore the company would have been in the position of selling 
something it had no right to sell. Thus the directors were committed, 
at this early stage, to maintaining the price of the stock, until sufficient 
debts had been converted to show a surplus of issuable capital above 
the capital issued in exchange for various loans, equal to the amount 
of two millions for which subscriptions had been invited. However, 
the sanguine spirit of the times relieved the company of all responsi- 
bility, for, from the middle of April till the autumn, the stock 
remained over 300. 

Accordingly, the directors having taken this risk, on April 14th ' 
two millions of the company's stock was offered for public subscription * 
at 300, payable as to 20 per cent, on application, either in cash or the 
bonds of the East India or Sword Blade companies^, and the remaining 
80 per cent., in calls of 10 per cent, each at intervals of two months 2. 
Soon afterwards a second issue of stock for cash was made, this time 
of a million at 400. These two issues together would have eventually 
realized 10 millions, which would have covered the amount due to the 
government and certain other cash payments, but the directors decided 
to deal with the amount received in a different manner, which discloses 
a feature in their transactions that renders the study of the companyV| 
finance very puzzling. Although two millions stock had been offered: 
for subscription on April 14th there was allotted two millions am 
a quarter of stock; and similarly, instead of a million at the second^ 
subscription, a million and a half, the explanation offered being that 
"the subscription was taken in several books to prevent crowding, 
notwithstanding which the crowd was so great that the clerks had not^ 
an opportunity of communicating with each others" Thus it turneclJ 

^ For an account of the bank known as the '' Sword Blade Company," vide infra, ^ 
Division xii., Section 3. 

2 Court Book, vi., f. 7-Brit, Mus. Add. MS. 25,497. ^ Ibid., f. 43. 

Div. X. § 5 b] First Cash Subscriptions 1720 309 

out that over 3f millions of stock had actually been allotted (instead 
of three millions) which would realize 12J millions ^ Out of this 
amount, it was decided to declare a dividend of 10 per cent., this being 
the first time there had been any departure from the original payments 
of 3 per cent, each half-year. 

The next step consisted in the publication of the scheme for the 
conversion of the annuities— no effort being made at this stage to deal 
with the redeemable debt. Since the annuities were irredeemable, it 
was to the company's interest to convert them as soon as possible, 
whereas the redeemable debt could be paid off at any time. The 
method of conversion was very involved. It consisted in offering stock 
at 375 for a part of the capitalized value of the annuities, while the 
remainder was paid in bonds and cash. The most interesting part of this 
operation consisted in the method of capitalization adopted. For each 
long annuity of £\00 subscribed, the government acknowledged itself 
indebted to the company for twenty times the annual value, i.e. for 
,^2,000. The company, to make the conversion more attractive, instead 
of capitalizing long annuities at 20 years' purchase, offered 32 years' 
purchase. Similarly, in the case of short annuities, it offered 17 years' 
purchase in stock and bonds, receiving 14 years' purchase from the 
government. The ratio of stock to bonds and cash was determined 
largely by the effort to issue stock, as far as possible in multiples of 
£9^5 stock, the remainder of the capitalized value being given in bonds 
and cash. For instance the following table shows the working out of 
the scheme in the case of a long annuity of £\0Q. 

Conversion of £\00 long annuity into South Sea stocks 

£100 annuity capitalized at 32 years' purchase = £3,200 
£3,200 payable as to £2,625 in stock at 375=700 stock=£2,625 
„ „ 575 in bonds and cash ... 575 

£3,200 £3,200 

The short annuities were divided into three classes, i.e. "the Prizes" 
and "the Blanks" in the lottery loan of 1710 and the remaining short 
annuities. In each case seventeen years' purchase was given as to the 
part payable in stock at 375, the difference, as between the different 
groups, consisting in the proportion of stock to cash. 

This offer was an attractive one to the annuitants. The stock, they 
were to receive at 375, was quoted at over 400 on the announcement 
of the terms. Thus there appeared to be the possibility of an immediate 

1 For convenience in this statement the figures are given only in millions, and 
the full statistics are printed at the end of this section, p. 354. 

2 For terms of conversion of short annuities vide infra, p. 355. 

310 The South Sea Company [div. x. § 5 b 

profit on making the exchange. Besides, instead of the annuitant 
being an isolated owner of capital, he became a member in a great 
financial organization, which already possessed the monopoly of the 
South Sea trade with other advantages to follow. Then, should this 
conversion be successful, there would be a large surplus of stock. The 
rapid rise in price suggested the expectation that it might continue. 
If so and if the surplus stock, now rendered available, were sold at a 
higher price than 375, any advance on that quotation would be for 
the benefit of stockholders, who had come into the company at 375 
or less. 

On the other hand, Archibald Hutcheson in his Computations had 
drawn attention, with great detail, to the fact that the actual assets 
of the company consisted of the debt due to it by the government. 
Against nearly 11 J millions of this, stock had been issued at par. 
Therefore the average amount of debt against each <^100 stock, when 
issues were made above par, must always be less than the price of the 
latest issue. Hutcheson's contention is on the whole accurate, but he 
scarcely attaches sufficient weight to the contingent advantages that 
would be receivable by the annuitant who converted. 

To ascertain the position of a long annuitant, it is necessary to 
estimate the original price of his investment. As has already been 
shown, these loans were issued at prices between fifteen and sixteen 
years' purchased At the beginning of 1715, when stocks were at high 
prices, long annuities sold from 14 J to 15| years' purchase 2, so that it 
may be assumed that, apart from the inflation of 1720, these annuities 
were not as a rule saleable at more than 16 years' purchase. At that 
price, the d^lOO annuity would be capitalized at <^1,600, or exactly half 
the amount at which it was capitalized by the South Sea company. It 
might be thought that, since the company doubled the capitalized value 
of these annuities, by reducing the price of stock exchanged by one-half 
{i.e. to 187^), an equivalent would be obtained in South Sea stock, 
representing the original value of the annuity. But this statement of 
the case overlooks the fact that a considerable payment was made in 
bonds and cash. Taking the bonds as worth par, the position of the 
annuitant stands as follows: 

Equivalent of a long annuity of £\00 at 16 years* purchase 
in South Sea stock. 

£100 annuity cost at 16 years' purchase = £1,600 

Paid by South Sea company in bonds and cash 576 

Remainder of original purchase price payable in South Sea stock ... £1,025 

^ Vide supra, pp. 290-2. 

2 The Prices of the several Stocks, annuities and other pultlick securities, by John 
Freke, Broker. 


Div. X. §5b] First Conversion of Annuities 1720 311 

For this sum of £\fi^6, there was given ^5^700 South Sea stock, 
or in other words this annuitant held his South Sea stock, after con- 
version, at 146 J. 

It therefore follows that, as long as the stock was over 146^, the 
annuitant did not lose money, calculating in terms of the prices of 
annuities ruling up to 1715. 

Making a similar estimate for the short annuities, the conversion of 
the Prizes in the lottery loan of 1710 may be taken as an example. 
The income in this case was payable only for 32 years from 1711, 
of which upwards of 9 years had expired. Therefore, the original 
capital subscribed would be no index to the value of this security in 
1720. A better estimated price can be obtained from the fact that 
in 1719 the loan was valued, for conversion purposes, at 11^ years' 
purchase. A year later it would be worth slightly less, but for purposes 
of calculation the value might be taken at that accepted in 1719. On 
this basis the following results are obtained : 

Equivalent of Prizes of £\00 a year in the lottery loan o/* 1710 
at 11^ years' purchase, expressed in South Sea stopk. 

£100 annuity valued in 1719 at 11^ years' purchase =£1,150 
Paid by South Sea company in bonds and cash ... 200 

Remainder payable in South Sea stock £950 

For this sum of £950 there was given £400 South Sea 
stocky so that this annuitant held the stock, received on 
conversion, at 237^. 

Thus, as long as the stock did not fall below 237^, the annuitant 
would not have suffered. The discrepancy, in the cost of South Sea 
stock in terms of the value of long and short annuities respectively 
before 1720, is noteworthy — the former holding the new stock on this 
basis at 146^ and the latter at 237^. The difference is accounted for 
in part by the fact that the short annuitant received a high income 
for a limited period with no return of his principal; whereas, after 
converting into South Sea stock, he had a right to participate in the 
income received by the company from the State, until the capital was 
paid off. 

One of the many difficulties in the finance of the South Sea company 
arises when any effort is made to calculate the stock issued as a result 
of this conversion. There was a second subscription of annuities in 
August; and, since the government capitalized all long and all short 
annuities at fixed rates respectively, it did not preserve the amounts 
converted at the different subscriptions separately. From the point 
of view of the Treasury, it made no difference whether a long annuity 

I 5^ 

312 The South Sea Company [div. x. § 

was subscribed in May or August, since in each case debt was credited — 
to the company at 20 years' purchase ; but from the point of view oS 
the issue of the company's stock, owing to the difference in the terms 
of subscription, the amount of annuities converted at the two sub- 
scriptions is of great importance. Therefore one must seek in the 
figures, authorized by the company, for the details of the different 
subscriptions, which have not been preserved in the government 
accounts. Such figures were published in 1720; but, on analyzing 
them, it appears that the company admitted a subscription of annuities 
in excess of that recorded by the Treasury. Thus there are two sets 
of figures — the one being those furnished by the company in 1720 and 
the other those preserved by the government. Several causes may be 
assigned for the discrepancy^; but, since the final statistics do not 
give the requisite particulars, it is necessary to deal with those 
furnished by the company, which turned out eventually to have been 
subject to modification. Even if the corrected data had been avail- 
able, the earlier ones would be more suitable for the present stage of 
the enquiry, since they were those that the investor of 1720 had 
before him. 

Taking then, for the present, the figures issued in 1720, the position 
of the company, after the taking of the first subscription, was as 
follows. The original capital was nearly 11 J millions. The stock to 
be issued in exchange for long and short annuities was about 3 J millions, 
and 3| millions had been issued for cash. These sums added together 
made the stock at the end of May over 18J millions. As against this 
share capital, the company had increased the debt, due to it by the 
State, by nearly 9| millions; which, in addition to the original debt 
of llf millions, made a total debt of over 21 millions. To this is 
to be added the cash receivable for the 3f millions stock, which should 
have eventually brought in 12| millions, making total present assets of 
33| millions, subject to the payment of the amount agreed upon to the 
State and the bonds issued to holders of annuities for a portion of their 
capital. Thus the company had an issued capital of 18 J millions, 
against assets of 33| millions. Further, the debt due to the company 
was also the amount of issuable capital. This was over 21 millions, 
of which only 18 J millions was actually issued; therefore there was 
a surplus issuable capital of 2J millions, which might have been taken 
up at 400 and would thus have realized 10 millions. This would have 
brought the assets subject to certain payments to about 44 millions, 
against a share capital of 18^ millions. According to this estimate 
the stock would have had actual assets against it of about .£^240 of the 

1 Vide infra, p. 329. 

Div. X. § 5 b] Assets and Liabilities, Map 1720 313 

market price. Any excess above ^240 represented the value placed on 
the profits to be derived from the conversions yet to be made, and the 
collateral advantages of the organization of a great capital and from 
the South Sea trade. There was a further consideration of a more 
speculative nature which might have been adduced to justify the high 
price of the stock. Up to 1719 all conversions had been effected on 
the basis of the increase of capital and government debt pari pasm. 
So before 1720 a capital of 11 j millions was secured on a like amount 
of government debt : whereas in 1720 an increase of 6f millions in the 
capital had been accompanied by an increase of 22^ millions in the 
assets \ In other words, while the capital had been increased by 50 per 
cent., the assets immediately available had been increased by 100 per 
cent., and there was in addition a surplus of issuable capital. To 
persons of a speculative temperament, the possibility of profits, 
advancing in a geometrical ratio of this nature, offered most fasci- 
nating prospects, and what kept the price high was the expectation 
that further purchases would be made at more enhanced quotations. 

To sum up the state of the company's finances on the announcement 
of the terms of conversion, there were assets for 60 per cent, of the 
market price, which was then 400, and the remaining 40 per cent, of 
the price was the estimate placed on the goodwill of the company. 
The ultimate value of this goodwill would depend on the success 
attending the organization of the capital-resources controlled by the 
company; and, as these included a monopoly, already granted, with 
the prospects of others to be secured later, it may be admitted that, 
although the amount payable for goodwill was high, it was not 

A similar conclusion may be reached by a slightly different line 
of argument. A very little consideration will show that, since nearly 
two-thirds of the capital had assets of the same value against it, which 
assets had not appreciated, that to justify the price of 400 for the 
whole stock, there should have been prospects of profits which would 
make good the deficiency in the assets, as these were in May 1720. 
Apart from speculative operations, such addition to the earning power 
might arise from financing on a large scale, and the resulting increase 
of income might, in time, provide a sufficient return on the whole 
stock, even at the high price of 400. It may be added too that the 
great need of commerce in the first quarter of the eighteenth century 
was a sufficiency of capital, and so it is scarcely possible to estimate 
adequately, under the different conditions of the present time, the many 
promising outlets there were then for the remunerative employment of 

1 Subject, however, to certain payments. 

314 The South Sea Company [div. x. 

capital. In fact capital, organized in one single unit, might be utilized 
in many directions, where no single fraction of the same capital could 
find its way, and therefore some premium on South Sea stock was 
justified and maintainable. The amount of this premium would 
depend on the extent of profits made from the use of the capital, 
and circumstances might be imagined in which a higher premium than 
300 per cent, would have been based on actual earnings. Thus it will 
be seen that the investor, who in 1720 bought stock at 300 or 
even 400, may have been unduly optimistic, but there was at least a 
possibility that his confidence would be rewarded in the future. He 
was in reality discounting the results of an organization which was 
not yet in existence. The tragedy of the situation was that, for 
carefully concealed reasons, such results could never be realized. This 
brings us to the second aspect of the subject, namely the secret 
history of the scheme, which first began to show itself at the end 
of May. 

C. The Secret History op the South Sea Scheme. 

The inner working of the conversion of the national debt constitutes 
one of the most remarkable and disgraceful chapters in British finance. 
As far back as November 1719, negotiations had been begun secretly 
between an inner group of South Sea directors and the Treasury, which 
would not have borne investigation. The design of converting the 
whole national debt into a single redeemable obligation to a trading 
company at a lower rate of interest would depend for its success, to 
a large extent, on what the company could make out of the transaction. 
Following the example of Law in France, the leading South Sea 
directors aimed at the monopoly of British foreign trade, outside Europe, 
and a supreme position in finance, at home, by paying off* the debt due 
to the Bank of England and the East India company. When this 
scheme was mooted to Aislabie, Chancellor of the Exchequer, he, accord- 
ing to his own account of the interview, proposed that the conversion 
should be divided between the Bank and the South Sea company, where- 
upon Sir John Blunt, a leading director, exclaimed — "No, sir, we will 
never divide the child ^^ Eventually the funds of the Bank and the East 
India company were excluded from the scheme. 

This modification of the original design removed a part of the 
favourable prospects, but there remained another great gain from the 
point of view of the directors — namely the acceptance of their proposals, 

1 Aislabie's speech before the House of Lords, in Proceedings of the House of 
Lords, III. p. VJ^ ; Mr Aislabie s Second Speech on his Defence in the House of Lords, 
July 20, 1721, p. 10. 

Div. X. § 5c] £1,259,325 spent in Bribes 315 

without any limitation as to the terms on which the company's stock 
was to be offered to holders of the debt. This absence of restraint was 
the great objection, made against the scheme, in the subsequent debates 
in Parliament, and it is inconceivable that members of the ministry, 
who had any experience of finance, could have failed to see the dangers 
of giving the company a perfectly free hand. Yet in January 1720 the 
ministry recommended the scheme of the company to the House of 
Commons. The grounds of this support were shameful. While the 
bill, authorizing the conversion was pending, a small committee of 
directors was formed, consisting of Sir John Blunt, Edward Gibbon, 
Robert Chester, Richard Houlditch and Robert Knight, the accountant, 
who were authorized in general terms to facilitate the passing of the 
measure. This committee disbursed secretly dE^l ,259,325 amongst 
favourites of the King, members of the government and of the Houses 
of Parliament^. This sum of over a million and a quarter was used for 
bribes by a method previously adopted by the old East India company. 
The committee of directors bargained for the support of a certain person at 
a certain price, payable on the passing of the bill. The transaction was 
passed through the company's books as an imaginary dealing in stock. 
The secretary entered in a special book, which was not open to the 
inspection of the directors, a certain amount of stock at about the market 
price when the bribe was accepted; and, after the act had been passed, the 
person, who received the bribe, was credited with a sale of the stock at 
the advanced price and was paid the difference. Needless to say the 
"friends'' of the company, whose support was purchased in this way, 
had never paid for the stock nor had any transfer been made out to 
them. During the two months that elapsed, while the bill was under 
consideration, the operation was disguised under cover of a loan on the 
stocks What led to the ultimate detection of these illicit practices 
was the fact that the stock, alleged to have been bought and sold, had 
no existence. Indeed, before the actual passing of the act, the company 
owned only a very small amount of its own stock. It required about 
.^574,500 of stock for these bogus sales, so that the company was in the 
position of appearing to sell something that had no existence. Indeed, 
except for book-keeping purposes, no sales were made, and the trans- 
action resolved itself into the company paying the difference between the 
price at which a purchase might have been made on a certain date and 
that at which a sale might have been made on a later date. 

The distribution of the million and a quarter of bribes is difficult to 
trace. The committee of directors dealt only with prominent persons, 

1 Repart of the Committee of Secrecy, in Journals of the House of Commons, xix. 
pp. 425-61. 

2 Ibid., XIX. p. 426. 

316 The South Sea Company [div. x. § 5 o 

each of whom guaranteed the votes of his own following. AislabieJ" 
Chancellor of the Exchequer, Charles Stanhope, one of the Secretaries, 
John Craggs, Postmaster, the Earl of Sunderland and others certainly 
became credited with South Sea stock in December and January, and 
none of them found any satisfactory proof that they had actually paid 
for it. It is beyond doubt that many of those named had not given 
"any valuable consideration" for the stock with which they were 
credited, and from the heads of the conspiracy the proceeds flowed to 
their supporters. Evidently the corruption of Parliament had been 
effected in a systematic manner, for the bill was carried in the Commons 
on April 2nd by 172 to 55, and in the Lords on April 7th by 
83 to 17 ^ 

Another illicit proceeding, which was afterwards traced to some of 
the directors in their private capacity, was the purchasing of options on 
the midsummer dividend as early as January. Hitherto the half-yearly 
distribution had been 3 per cent., but an immediate payment of 5s. for 
the dividend on £\0() was offered, with the promise of a further 3 per 
cent., should the option be exercised. It therefore follows that more 
than two months before the passing of the bill, certain of the directors 
had already determined to increase the dividend, and that they took 
advantage of their knowledge of this intention to obtain for £^. 5s. 
a payment of cs^lO in stock, which was saleable at prices varying from 
.e'^O to J>1002. 

These events in the secret history explain why the directors were 
forced to take the risk of issuing stock for subscription before such stock 
was legally issuable. For it was out of the proceeds of the first sub- 
scription that the bribes, for the passing of the act, were paid. Thus 
while, as has already been shown, the investor, as distinguished from 
the speculator, who purchased stock in April, was discounting the future 
organization of the company''s capital as the source for increasing its 
earnings so as to justify a price between 300 and 400, the directors 
were committed to a method of managing the undertaking that involved 
several fraudulent operations. Indeed the increase in the amounts 
allotted at the first two money subscriptions was suspicious. It will be 
remembered that three millions of stock were offered to the public, but 
three and three-quarter millions had been actually taken up. There 
was no resolution authorizing this additional subscription, and it was 
discovered in 1721 that, in at least one case, stock had been issued 
to Aislabie at the second subscription eight days after the list was 

^ Proceedings of the House of Commons, vi. p. 214 ; Proceedings of the House of 
Lords, III. p. 126. 

2 Proceedings of the House of Lords, in. p. 185. 

Div. X. § 5 c] Fraudulent Operations 1720 317 

supposed to have been closed, and when the market price showed an 
advance of 40 per cent, on the amount paid up*. 

In fairness to the person who bought stock up to the middle of April 
1720 it should be noted that these facts in the inner history of the 
management of the company were most carefully concealed. Extra- 
ordinary precautions were taken to disguise the less reputable dealings 
of the committee, concerned in the promotion of the bill. The irregu- 
larities were not discussed at meetings of the whole court of directors, 
and the papers that recorded them were not accessible to more than 
three or four persons. It was only after the strongest pressure from 
Parliament in 1721 that the facts, relating to the bribery of ministers, 
were extracted, and even then much of the truth was successfully hidden. 

By the beginning of May thoughtful people should have begun to 
see that the directors had no intention of developing a legitimate 
business and were devoting their energies, as well as the resources of 
the company, towards the manipulation of the market. Previously the 
price of the stock had been inflated by devices that could not be readily 
detected, but now the court adopted a policy which was openly intended 
to advance quotations. This new departure was by the making of loans 
by the company on its own stock, and it constitutes the second stage in 
the history of the finance of 1720. 

D. Loans on Stock, April to June 1720. 

At first sight it seems incredible that, while money was being paid 
in on the first two money subscriptions, the company should have 
declared a dividend payable, not in cash, but in stock. The truth of 
the matter was that cash was required, not only to discharge the illicit 
claims for the promotion of the act, but also to enable the directors to 
make loans on the security of the scrip. As early as April 20th (when 
the price of the stock was at 328 to 339), it was resolved to lend half a 
million at the rate of =£^250 on ,^100 stock — no person to receive a loan 
of more than ^£^5,000. Further loans were authorized on May 20th 
and June 9th 2, and in addition money was lent on the partly paid 
subscriptions, taken in April. 

The effect of these loans was to bring about a rapid rise in quotations. 
The increase in the resources available for making purchases added to 
the demand; while, at the same time, it was necessary for the borrowers 
to deposit with the company stock which had a larger market value 
than the sums lent on it. Thus, while the demand was increased, the 

1 Journals of the House of Commons, xix. p. 434. 

2 Ibid., XIX. p. 435. 

318 The South Sea Company [div. x. § 5 

supply was artificially restricted. Not only so, but there was conside 
able delay in the issue of marketable scrip against annuities subscribed; 
so that the company was in a fair way to " corner '"* its own stock. 
There had been vast transactions on margins ; and, although the general 
tendency of the market was bullish, there were no doubt very large beaa| 
sales, which, under the circumstances indicated, were difficult to cover. 
It was probably for this reason that the directors were pressed to take 
new subscriptions, and the same cause explains the delay in doing so. « 

At the same time the company was not in a sufficiently strong 
financial position to corner the stock completely. In May there had as 
yet only been actually paid up on the 3j millions of stock issued in 
April, a sum of under two and three-quarter millions, and so the directors 
were forced to borrow to pay part of the bribes as well as to provide 
funds to lend to stockholders. Thus the policy of supporting the 
market could be pursued only within narrow limits; and there was 
a temptation for the directors, after raising the stock to a high price, to 
sell the pawned stock (which was transferred to the company) as near the 
top of the market as possible, and then, on the resulting relapse, to 
replace the stock, making a large profit by the operation, provided the 
fall did not extend beyond the margin on the stock. 

These general principles explain the quotations of the stock from 
May till June. Had the directors allowed the market to be affected 
solely by normal influences, it is probable that the price (which was 
from 325 to 350 from April 15th to 20th) would have relapsed con- 
siderably, and less onerous terms would have been obtainable from the 
annuitants. Although half a million was authorized for lending and 
nearly a million was actually lent in the month from April 21st to 
May 19th, the price was barely steady ^ It fluctuated from 345 to 358 
on April 22nd; and, even with the support of the loans, it relapsed 
a little until May 10th, when, in view of the subscription of annuities to 
be announced on the 20th, further support was given by the company 
and the quotation was between 350 and 360 until the 19th. When 
it is considered that the lending of nearly a million — which would lock 
up close on c£*400,000 of stock — barely sufficed to prevent a bad break 
in the price, it will be apparent that there was a very large overplus of 
sales by the general public on balance. In fact the inner group of 
directors, who managed the company's finance, were past masters in the 
delicate operation of rigging the market. Almost simultaneously with 
the announcement of the terms for conversion of the annuities, fresh 
loans were authorized, and again large purchases of stock were made. 
The situation, as viewed from the outside, was eminently satisfactory. 

^ The movements in the price of the stock are shown day by day from May to 
September in the diagram at the end of this volume. 

Div. X. § 5 d] Rigging the MarJcet in the Stock 1720 319 

For the month prior to the 18th of May the quotation had been almost 
stationary, then, on the announcement of the terms of conversion, it 
rose to 400 on the 21st and to 500 by the 28th, to 600 on the 31st, 
reaching 700 the following day and closing at 770. On June 2nd 
the stock was over 800, having doubled in price in a fortnight. This 
enormous rise was attributable in part to the devices of the directors in 
rigging the market, partly to false information they circulated as to the 
future prospects, partly again to the influence of a spirit of wild specu- 
lation which had now been aroused. 

The effect of the loans, made on the eve of the publication of the 
terms of subscription of the annuities, has already been explained; 
and it may be added that, in artificially increasing the price of the stock, 
the directors were able to offer that stock, in exchange for the debts 
converted, at a much higher price than would otherwise have been 
obtainable. On the success of the first group of conversions becoming 
known, it was realized that there would be a large quantity of surplus 
stock; and, as the price advanced, the value of such surplus on paper 
became greater and greater. Also, in future conversions, higher prices 
could be set on the stock given to owners of government debts, and 
therefore the surplus stock from such future conversions would be 
proportionately increased. For instance, if the same amount of annuities, 
that were converted in May, had been subscribed early in June, the 
South Sea stock offered in exchange could have been priced at 750 instead 
of 375, and therefore only half the quantity of stock would have been 
issued, and the surplus available would have been doubled. So far from 
discouraging the growing speculative fever, the directors encouraged it 
by every means in their power. Calculations had been published, pro- 
fessing to prove that, the higher the price paid for the stock, the greater 
would be the benefit accruing to the purchaser^ Rumours were circu- 
lated of very great dividends to be paid in the future, 60 per cent, at 
Christmas was talked of at one time 2. Exaggerated estimates of the 
profits, derivable from the South Sea trade, were formed and some 
unjustifiable expectations of what might be gained by the company 
controlling the government. 

The rise of over 400 in the price of the stock, during the fortnight 
ending June 2nd, had been much too sudden to last, and on the 3rd 
there was a relapse to 690— a fall of no less than 180 in twenty-four 
hours. From the 4th to the 8th fluctuations were between 780 and 
735, and it seemed as if there would be a fresh fall, but on the 9th the 
directors again resolved to lend money on the security of stock. This 

1 E.g. in the Flying Post, April 9th, reprinted in part by A. Hutcheson in his 

2 Coxe, Walpole, 11. p. 187. 

320 The South Sea Company [div. x. § 5 d 

support of the market was much needed, if the price was to be mainB 
tained, for on the 14th the second payment of 10 per cent., on account 
of the money subscriptions, was to be made; and many stockholders, 
who had applied for stock, had to sell their old stock, so as to take up 
the new. Such sales exercised a depressing influence in spite of the 
funds provided by the company, and on the 14th the quotation was 
again as low as 690. The next day the stock was quoted from 710 to 
755, and it remained about 750 till the 22nd. From this time onwards, 
prices were influenced by the second group of subscriptions, the first of 
which was taken between June 16th and 22nd. 

E. The Second Group of Subscriptions. 

By. the middle of June the directors had lent about four and a half 
millions, which, with the money payable for bribes and the bonds 
due to the annuitants, made a total of about 8J millions to be found. 
As against this, 30 per cent, of the sums, payable on the first two 
money subscriptions, was now due. These issues should have realized 
12f millions when fully paid, and thirty per cent, of that amount had 
provided about 3f millions. Therefore, the eff*ect of the manipulation 
of the market on the company's finances was to leave it indebted for 
more than twice the cash it had as yet received from the members. 
No fact could speak more strongly as to the strain on the resources of 
the undertaking involved by the continued inflation of the price of the 
stock by the directors. To carry on the same policy, it was necessary 
that the basis of the company's credit should be strengthened, and 
accordingly it was decided on June 15th to off'er five millions stock for 
public subscription at 1,000, 10 per cent, being payable on application, 
and the remainder in nine instalments of the same amount at intervals 
of six months from July 2nd, 1721 \ Both the price and the sum total 
were impossible. To expect that 50 millions should be raised in five 
years, in addition to nine millions still to be called up on the earlier 
subscriptions and with the surplus stock expected to accrue from the 
approaching conversion of the redeemable debt still to be sold, was 
utterly ridiculous. What makes this issue remarkable was the fact 
that, on the day it was announced, the old stock was from 705 to 755. 
It followed that persons, who subscribed, were in the position of paying 
25 per cent, more for the privilege of applying, than the price at which 
they could purchase the old fully paid stock. The inducement to pay 
this excessive additional premium was that the calls on the new stock 
were distributed over such a long period. Speculators took up as much 

1 Journals of the House ofComnKms, xix. p. 433; Hutcheson, Computations , p. 94. 

Div. X. § 5 e] Third Cash Subscription, June 1720 321 

stock as they could find money to pay the first call of 10 per cent., and, 
as the next instalment was not due for over a year, they trusted to 
a rise in the price to enable them to sell within that time. The success 
of this issue provided the directors with funds amounting to about 
5 millions, and this sum was used to force up the price of the stock. 
Three millions were lent out within a few days after the money had 
been received; and, by the end of June, a total of nearly 4f millions 
had been employed in supporting the market. At this date the total 
loans from April amounted to the enormous sum of 11 J millions. This 
was more than had been paid up on the three money subscriptions; 
and as yet no real provision had been made for discharging the bonus, 
payable to the State, on the debts converted. 

The diversion of the funds, received from those who had paid their 
application money for the third money subscription, produced an almost 
immediate effect on prices. The stock remained about 750 until June 21st. 
On the 22nd it fluctuated from 750 to 785, touching 1000 on the 23rd 
and 1050 on the 24th\ The latter was the highest recorded quotation. 
At this stage it is woi*th glancing back at the steps by which this 
excessive inflation had been reached. On the passing of the act, the 
stock was about 300. The April loan barely sufficed to prevent a serious 
relapse in the price. The combined influences of the May loan, the 
taking of stock off the market, the announcement of the 10 per cent, 
stock dividend and the success of the first group of conversions raised 
the quotation to 750. The third loan no more than enabled this figure 
to be maintained. Thus an expenditure of 4J millions (or with that on 
the subscription-receipts of 6J millions), with the aid of other causes, 
raised the stock 450. The next loan of 4f millions only increased 
quotations, and that temporarily, by 300, owing to the fact that the 
issue of more stock had increased the supply; and, although the new 
stock was only credited with 10 per cent, paid up at this date, it is 
obvious that it had an important effect in widening the market. 

Although the rise culminated on June 24th at 1050, the price was 
kept fairly steady during the ensuing five weeks. In the remainder of 
June the quotation was 1,000 on the 25th, the 27th and the 29th, falling 
to 950 on the 30th. In July the stock varied from 990 to 940. In view 
of the fact that a second subscription of annuities was to be taken on 
August 4th, it is significant to find that the court of directors resolved 
on July 27th to lend money from that date until Michaelmas "in such 
manner as was judged best for the company's interest ^'^ but in spite 

1 The Evening Post of June 24, 1720, and The Caledonian Mercury of June 26 
mention a quotation of 1060, but the highest price given in the other papers or in 
The Prices of the several Stocks, by John Freke, is 1050. 

2 Court Book, viii., f. 33— Brit. Mus. Add. MS. 2o,-i99, 

s. c. III. 21 

322 The South Sea Company [div. x. § 5 e 

of such proposed support the market was inert, and quotations fell 
slightly. On July 30th the price had been 950 and by August 4th — 
the day of the announcement of the terms for the second subscription of 
annuities — it was from 870 to 890. 

The conditions offered to the remaining annuitants were made to 
appear as favourable as possible. Instead of 32 years' purchase for long 
annuities, 36 years' purchase was now offered; while, as before, there 
was one portion of the capitalized sum to be taken in bonds and cash 
and the other and larger part in stock. For purposes of conversion this 
stock was priced at 800 or about 10 per cent, below the current market 
price. Since none of these annuities originally cost more than 16 years' 
purchase, apparently no holder would be at a loss until South Sea stock 
fell below 355^ i, but in reality the proposition was more favourable 
than this since there was a payment in bonds and cash of c£*400 per c^^lOO 
annuity. Taking the bonds at par, the position of the annuitant would 
be as follows: 

Equivalent of a long annuity of .^100 a^ 16 I/ears' purchase, as ex- 
pressed in South Sea stock, a£cording to the proposals of August 4ith. 

£100 annuity cost at 16 years' purchase £1^600 

Paid by South Sea company in bonds and cash 400 

Remainder of original purchase price payable in South Sea stock ... £1_,200 
For this sum of £1^200 there was given £400 South Sea stock, or £300 of 
the original pajmient was exchanged for £100 South Sea stock. 

It follows from these figures, that in terms of the original purchase 
price, an annuitant would not really lose until the stock he received 
fell below 300. As compared with anyone, who had subscribed long 
annuities in May, the latter held South Sea stock, in terms of original 
purchase price, as low as 146^^ ; so that those who came in in August, 
although they received ,£'400 stock as against ^6^700 stock exchanged for 
the same amount of annuity in May, owing to the discrepancy in the 
part paid in bonds and cash, held their stock at more than twice the 
price at which they could have obtained it on the first conversion. 

A similar estimate of the price of South Sea stock, exchanged for 
short annuities, shows that it was held at 500 in terms of the value of 
Prizes of the Lottery-loan of 1710, this comparing with 237| for the 
same security, according to the terms announced in May. 

Meanwhile in anticipation of the conversion of the redeemable debt 
(which had not as yet been dealt with), people were lodging their scrip, 

800 X 1 f? 
1 I.e. -~~ — =355|. 2 Vide supra, p. 311. 

Div. X. § 5e] Second Conversion of Annuities 1720 323 

so as to make certain that they would be in good time. There were 
over 16,000 holders of redeemables and the pressure on accommodation 
at the Bank of England, where the bonds were received, was so great 
that tables for the clerks had to be placed in the adjoining streets ^ 
At length, in the first week of August, the terms for conversion were 
announced. For each £\00 of debt a nominal price of 105 was taken 
as a basis of calculation, exchangeable into South Sea stock at 800. 
These debts had originally been issued at par, so that all the holder 
had to safeguard him, against a fall in the price of the stock he 
received, was the premium of 5 per cent. In other words, he held 
his new stock at 763 in terms of the original cost of his investment. 
The inequality of the conditions, given the owners of redeemable debts 
as compared with those offered the long annuitants, may be seen from 
the fact that, in the exchange made in August, the latter held South 
Sea stock at 300 and the former at 763, calculating from the original 
cost of each investment. 

On August 12th the final subscription for a million and a quarter 
in cash was taken at 1,000. The amount announced had been a milhon, 
but in this case, owing it was alleged to names being taken in several 
books, the amount was increased by 25 per cent.^ The amount payable 
on application for this fourth subscription, as well as the call due the 
same day on the first, gave the directors funds to again manipulate 
the market. The stock had fallen to 880 on August 5th, but by the 
11th it had been raised to 900, which was maintained for the next 
two days. 

By this date the greater part of the conversions had been completed ; 
and, unless the price of the stock in future issues had been set far above 
1,000, the market quotations were unjustifiable. Further, it would have 
been impossible to have floated the surplus stock at 1,000, much less 
at an increased issue-price. This must have been apparent to anyone, 
who considered the position calmly. A more serious element of danger 
was the bad state of the company's finances. The directors had lent 
more money than they had at their disposal, and they were obliged 
to pledge the company's credit. Against the obligations thus incurred, 
there were the calls still due on the four money subscriptions; but, 
to ensure the payment of these calls, it was necessary that the state 
of credit should have remained good. Even at the best, it is unlikely 
that the capital required could have been found, and a collapse was 
inevitable, owing to the many indirect practices of some of the re- 
sponsible members of the company. So that, to state the situation 
briefly, the company had staked its future on credit remaining good, 

1 Anderson, Annals of Commerce, iii. p. 330; Coxe, Walpole, ii. p. 189. 

2 Court Book, vi., f. 43— Brit. Mus. Add. MS. 25,497. 


324 The South Sea Company [div. x. § 5 e 

while at the same time some of the directors had undermined both tWP 
credit of the company and, in a less degree, that of the nation. This 
being so, the collapse of the market in South Sea stock was only a 
matter of time and in any case it must have come soon. 

F. The BEaiNNiNG of the Collapse, AuausT to 

The first shock to credit came from the South Sea company. 

directors, in arousing a spirit of wild speculation, had let loose a force 

which they were unable to control. The inflation of quotations had 

tempted the unscrupulous promoter to launch all kinds of schemes, and 

soon the shares of these ventures advanced to enormous premiums. 

Everyone, who projected a company, thought in millions, but only 

called up shillings on the shares. Thus, in addition to the outstanding 

calls on South Sea stock, there were immense liabilities on the nominal 

capital of other companies. As these matured in the future, the 

difficulties of obtaining cash from the subscribers for the four issues 

of South Sea stock for money would be intensified. The inevitable 

consequence would have been a great increase in the rate of interest 

owing to the scarcity of money, and this would have reduced the 

inflation. The prominent directors of the South Sea company dreaded 

such a contingency ; and, as they had paid so high a price for securing 

the act of Parliament under which they professed to transact business, 

it was only natural that they were exceedingly jealous of new schemes 

which could claim no legal authorization. Therefore they decided to 

endeavour to crush out the new and rival ventures, by putting the law 

in force against them. The attitude of the State to trading companies 

was somewhat curious. Legally, no one but the sovereign could create 

a corporation ; and, if a company created by royal charter required any 

exceptional privileges, after the beginning of the eighteenth century, 

it had to obtain these from Parliament. This procedure was adopted 

in the case of any important company which required a monopoly or 

other rights; but, from the time of William III., it became customary 

for individuals to unite as a company and carry on a business, without 

any legal authorization. There were many associations of this kind 

formed from 1692 to 1695, and no objection was made to their 

operations. At the same time their existence was merely tolerated, 

but it was in no sense legalized. Therefore the South Sea company 

was within its rights in raising the question of title in the case of 

unchartered companies in 1720, or of associations working under a 

doubtful charter. Accordingly on August 18th a writ of scire Jacias 

Div. X. § 5 f] Writ of Scire Facias issued 1720 325 

was obtained against a number of the undertakings whose shares stood 
at the highest premiums ^ 

While the South Sea company was within its rights in raising this 
question, its action was most injudicious. It is a good legal maxim 
that the plaintiff should come into court with clean hands, and it 
might well have been argued that since the directors, who professed 
themselves aggrieved by companies acting under obsolete charters, 
employed as their banker an association that worked under a grant 
for the making of hollow sword-blades, they had condoned the offence. 
Indeed, when one considers the many indirect practices of the directors, 
both in obtaining and applying their own act of 1720, it was the 
height of effrontery to have raised the question. Probably in law, 
as certainly in general ethics, it was less blameworthy to act without 
authorization, than under Parliamentary sanction obtained by the 
corruption of the ministry. In the second place, the object of the 
directors was presumably to strengthen credit by the prevention of its 
being over-extended. But they forgot that the inflation of the prices 
of the securities they attacked had been brought about by purchases 
of these very securities on a credit basis. Now, on the issue of the 
writ, the prices of the shares affected fell very heavily, far beyond the /^ 

margins on which they were carried, and so it became necessary for 
the speculators to sell other securities to meet their liabilities. It 
followed then that the great fall in the quotations of the interdicted 
companies was accompanied by a sympathetic relapse in the price of 
South Sea stock. Before the issue of the writ the price had been close 
on 900, and within a week {i.e. by August 25th) it had fallen to 810, 
relapsing further to 755 on the 30th. Thus in less than a fortnight 
the quotation had receded by 125. On the 31st it was known that 
the court had decided to pay a dividend for the next twelve years 
of 50 per cent, annually, and the stock rose to 815. This announce- 7 
ment was the last effort of the court to maintain the current price, 
and it was based on a reversion to the practice of early companies 
of making divisions of capital to the stockholders. To have made 
good this promise, it would have been necessary to divide the calls 
receivable on the money subscriptions, together with the proceeds of 
the surplus stock, selling the latter at close on 1,000. In fact the 
directors, having exhausted their credit in supporting the market, now ^ 
endeavoured to effect the same object by pledging the capital resources 
of the company for the payment of dividends. At first this new 
departure strengthened the market. On September 1st the stock was 
quoted ea; dividend from 780 to 770, and during the next week the 

1 This question is dealt with from the point of view of the relation of companies 
to the State and to each other in Part i., Chapter xxi. 

326 The South Sea Company [div. x. 


quotation gradually relapsed, touching 670 on the 8th. The court n 
declared a dividend of 30 per cent, at Christmas, but the public began 
to realize that the promise was illusory ; for, with a crumbling market, 
the expected prices could not be secured for the surplus stock, and the 
money subscriptions outstanding were unlikely to be paid\ Therefore, 
so far from inducing purchases of stock, this dividend-announcement 
was unfavourably received ; and, at the meeting on the 8th, the directors 
had stifled objections and behaved in a high-handed manner^, so that on 
the 9th the stock was as low as 575 — a fall of 300 in about three weeks, 
and of no less than 44 per cent, from the highest point of the year 
which had been recorded only seven weeks earlier. 

Up to September 9th the fall had been very alarming, but during 
the next ten days there was a remarkable collapse, which soon became 
a panic. The reduction of quotations from 900 to 600 had been 
occasioned by the check to the caiTying of the shares of lately formed 
companies on credit, and partly by the fact that the South Sea directors 
were no longer able to obtain funds to support the market. When 
prices had been highest in the summer, private bankers had lent money 
on the stock at 600 ; and, once the quotation reached this price, sales 
of pawned stock were made. Such sales accentuated the depression ; 
and, as the quotation fell, the limits of earlier loans were reached and 
more stock was offered. 

For a few days — from the 10th to the 15th — the stock was fairly 
steady, considering the times, its fluctuations being between 670 and 
555. On the 16th, in view of the meeting called for the 20th, the 
price was from 550 to 510, and the next day from 480 to 450 — a fall 
of 100 in forty-eight hours. On Monday, the 19th, 380 was touched. 
The cause that produced a decline of 200 in four days was the infor- 
mation that the court would consider whether the terms offered to the 
second group of subscribers should be reduced. This meeting was held 
on the 20th, and there was much recrimination. This was almost 
unavoidable, for the interests of the members of the company were 
sharply divided. Those who had received South Sea stock at 800 in 
exchange for government securities, saw it selling at barely half that 
price. The condition of persons, who had taken up the last two cash 
subscriptions, was even worse. They had contracted to pay more for 
the stock, and many of them had no means of raising capital to meet 
the remaining calls. Therefore both classes clamoured for a revision 
of the terms on which they had come into the company. On the other 

1 Court Book, vi., f. 48 — Brit. Mus. Add. MS. 25,497; cf. An Argument proving 
that the South Sea Company are able to make a Dividend o/*38 per cent, for twelve Years, 
Adapted to the Meanest Capacities, 1720. 

2 Historical Register, v. p. 366. 

Div. X. § 5 f] Failure of the Sword Blade Co, 1720 327 

hand, the original proprietors and the annuitants, who had converted 
in May, were not as yet affected by the fall in price, beyond the loss 
of a possible paper profit. They were unwilling that any alteration 
should be made, which would reduce the amount of surplus stock. 
After a long and acrimonious discussion, the meeting adjourned without 
coming to any decision, but it was generally recognized that a reduction 
in the terms of the second subscription must be made, for it was known 
to the directors that their bankers — the Sword Blade company — were in 

After this meeting the price fell on the 21st to 395-350. Then 
there were rumours that Walpole had induced the Bank of England 
to support the South Sea company, and on the 22nd the stock rose to 
400, fluctuating between that price and 350 on the 23rd — the day the 
agreement was signed by a joint committee of the two companies \ 
This agreement provided that a part of the debt due by the State to 
the Bank should be subscribed into South Sea stock at 400, and it was 
eventually ratified by the directors of the Bank 2. The Bank also 
undertook to circulate the bonds of the South Sea company. It was 
this part of the proposal that nearly wrecked it in the preliminary 
discussions. The South Sea company had begun its career by trans- 
acting a class of business, which had previously been in the hands 
of the Bank, and there was considerable jealousy between the two 
undertakings. Both had been antagonized in 1720, when they com- 
peted for the privilege of converting the national debt, which was 
eventually secured by the younger corporation. In the days of its 
prosperity it remembered the rivalry of the Bank; and, when it had 
large cash and credit transactions, it gave the business to the Sword 
Blade company to the exclusion of the Bank of England. The latter, 
now that the South Sea company had fallen on evil days, did not forget 
this; and, when it was proposed that the circulation of the bonds 
should be divided between the two banking companies. Sir Gilbert 
Heathcote replied coarsely, but effectively, that "if the South Sea 
company be wedded to the Bank, it ought not to be allowed to keep 
a mistress ^^ 

Though the agreement was signed, events made its accomplishment 
impossible. On September 24th the Sword Blade company was forced 
to suspend payment, and there was a run on the Bank of England, 
which precluded that institution from endangering its credit by any 
active assistance to the South Sea company. The suspension of the 
Sword Blade company took place on a Saturday, and on the following 

1 Court Book, vi., f. 55— Brit. Mus. Add. MS. 25,497 

2 /6irf., f. 56. 

3 Vide supra, p. 240. 

328 The South Sea Company [div. x. § 5 f] 

Monday South Sea stock opened at 360 and fell to 300, touching 190 
on the 28th. 

The quotation of 190 on September 28th was the lowest points 
reached for some time, and it was a sufficient index of the necessity 
for re-adjusting the terms of the second subscription. The adjourned 
meeting was held on the 29th ; and, although only ten days had elapsed 
since the previous one, the price of the stock had fallen in that short 
period by more than one-half^ Thus the stock now stood below the 
level at which almost all of the holders of debts had converted, and the 
necessity of ultimate re-adjustment of the finances had become urgent 
through the failure of the Sword Blade company. 

Gr. The Modification of the Terms of the Second 
Group of Subscriptions in September. 

At the meeting of the company on September 29th, Sir John] 
Fellows, the sub-governor, made a speech which described the gravity 
of the position. " No man can have an English heart and be at present 
insensible of the calamities of his country. The credit of our nation, 
that has been hitherto sacred and inviolable, that has stood the shock 
of so many wars, the rage of different parties and all the efforts of 
our common enemies is melting away^ while we fancy ourselves in the 
possession of it. Every transfer-day brings the ruin of a hundred 
families, and there is scarce a gentleman who hears me but has felt the 
dismal effects of what has lately happened either in himself, his relations 
or his friends. Not only private men, but our most substantial gold- 
smiths and even whole companies stop payment. 'Tis almost become 
unfashionable not to be a bankrupt. The reason of this is plain — our 
specie begins to sink beneath the weight of our paper credit^.'''' No 
doubt the miseries of the time in this description are not exaggerated, 
but what Fellows omitted to state, and could scarcely be expected to 
have confessed, was how far the credit of the nation had been strained 
by the artifices of a group of the directors. Not only was Parliament 
corrupted by them and the market manipulated, but the dishonesty, 
that had characterized the beginning of the conversion and the inflation 
of prices, was continued during the collapse. It will be remembered 
that the company held large quantities of stock, pledged to it as 
security, for loans ; and, on the beginning of the decline, sales were made 
with a view of buying in again at lower quotations. Thus the directors 
had much to do with accentuating the panic. The extent of the sales a 

1 The recorded quotations were: Sept. 20th, 400, 420, 390; Sept. 28th, 260, 190. 

2 Hiatorical Register, v. p. 380. 

Div. X. § 5 a] Terms of Conversion modified 1720 329 

of pawned stock by the company cannot be determined; but, when 
the accounts were inspected by the House of Commons early in 
1721, it was discovered that there was a deficiency in this account of 
nearly half a million stock, showing that of the sales made that amount 
had not been replaced \ Another fraudulent practice, sanctioned by \7 
some of the directors, was allowing the withdrawal of the allotments 
of stock, made to some favoured persons, in the third and fourth 
money subscriptions after the price had fallen. The preferential treat- 
ment, accorded to certain subscribers in the third subscription, was 
specially glaring. Five millions stock were offered, applications were 
received for eight millions, and the whole five millions were entered in 
the books as allotted. Yiet it was found that subsequently the amount 
of stock issued was reduced by dg^600,000, and by ^50,000 in the fourth 
subscription'^. This course offers an explanation of a discrepancy as 
between the figures published by the company in 1720 and those 
compiled afterwards by the government. The total issuable stock, 
according to the former account, was ^38,564,179. 13*. lOd ; and, 
according to the latter, only <i£*37,802,203. 5*. 6^., so that the company 
led the public to believe it had more than three-quarters of a million 
issuable stock than turned out to be the case. Now, the issuable stock 
depended on the amount of debt subscribed, and it is impossible that 
an error of this magnitude could have been made. Since it was proved 
that money subscriptions were cancelled, it is probable that the same 
preference was accorded to subscribers of debts, and it is not unlikely 
that the persons, who benefited, were those who received payments 
before the passing of the act to aid the company in Parliament. In 
the one case a payment was made by the directors under colour of 
fictitious stock, in the other real stock was made fictitious. 

In view of these facts and probabilities, it is obvious that the directors 
(or some of them) had much to conceal, and the best course now open 
to them was to stave off any investigation of their recent proceedings. 
Apart altogether from the credit of the company, it was necessary, in 
order to prevent the interference of the State, that the terms of the 
subscriptions made in August should be reduced. Accordingly a 
scheme was carried on September 29th by which, instead of the stock 
for the second group of issues being exchanged at 800 and 1,000, it 
was priced uniformly at 400 ^ The effect of this re-arrangement was 

* Journals of the House of Commons, xix. p. 435. 

2 Ibid., XIX. pp. 433, 434. The Committee of Secrecy charged the directors with 
the converse irregularity in the case of the first two money subscriptions, i.e. of 
increasing the amount of stock allotted, after the lists had been closed and on the 
price having advanced. 

3 There were certain minor modifications affecting the capitalization of the 
ammities which are fully stated infra, pp. 354-8. 

330 The South Sea Company [div. x. § 5 a 

twofold. First, it did away with the great inequality between the 
two groups of subscriptions. Henceforth all the subscribers in 1720 
exchanged into South Sea stock between 300 and 400 — as is shown in 
the following table : 

Price at which South Sea stock was valued in exchange for 
Government debts after September 9>9th, 1720. 

First money subscription at 300 

Second „ ,, 400 

First subscription of annuities at 375 

Third and fourth money subscriptions, originally at 1,000, 

reduced to 400 

Second subscription of annuities and subscription of redeem- 
able debts, originally at 800, reduced to 400 

There remained the difficulty that the original capital was issued at 
par or less, so that the stock had assets against it which, on the average, 
must remain less than the highest issue-price which was now 400, unless 
such average could be raised by the proceeds of the issuable stock, as 
yet unissued. But, in the second place, the effect of the re-adjustment 
of terms on the quantity of issuable stock was very important. The 
amount of stock, now required to satisfy the second group of subscribers, 
was increased, and therefore the surplus of issuable stock would be 
proportionately decreased. 

Contemporary opinion on this arrangement was reflected by the 
price of the stock. While the diminution of surplus stock was a dis- 
advantageous influence, it was recognized that such stock of a discredited 
company was of small value, as any attempt to sell it in a panic-stricken 
market would have made the collapse a permanent one. Therefore, the 
tendency of the reduction of the terms to aid in restoring credit was 
regarded as a favourable point, and the price of the stock improved. 
As a result of the meeting of September 29th the quotation had been 
from 200 to 330 and (although the improvement to above 300 was 
only temporary), it remained over 250 until October 10th. There 
was a fall to 165 on the 14th, but this was partly recovered by the 
17th, and from that date until November 12th the stock was over 
200. From November 14th to the 17th the price relapsed, 140 being 
quoted on the latter date. The next day a recovery began, which 
continued till the 22nd, when 210 was recorded. From the 23rd until 
December 14th, the stock continued to lose ground. It was at 196 
to 180 on the former date, and it touched 124 on the latter — this being 
the lowest price of the year. Although this quotation was only one- 
eighth of that ruling on June 25th, as compared with the price at the 
beginning of the year (which was 128^) it shows only a small fall, and 

Div. X. § 5g] Hostility to the Directors 1720 331 

it is worth mentioning that of the lowest annual prices since the 
foundation of the company that of 1720 is the highest. With the 
stock at 124 it is plain that only a small value was placed on the surplus 
stock ; and, as this opinion was modified, the price improved, until 200 
was reached on December 29th and 30th. 

H. The Parliamentary Enquiry. 

When Parliament met on December 8th, it was confronted by an 
extraordinary situation. The scheme that it had sanctioned less than 
a year before had not only miscarried, but had aroused the most violent 
indignation throughout the country. The speculation had not been 
confined to London but had penetrated to the chief towns. Edinburgh 
and Dublin had been involved in the fever, country gentlemen, who 
owned annuities or redeemables, had subscribed them, and were in 
difficulties if they had speculated, or, if they held their stock, were 
indignant at the possible profits they had lost. The breaking of credit 
had affected industry everywhere, and it began to be felt that the South 
Sea directors were to blame. Some of them had been exceedingly 
arrogant at the time when they were courted for early information as 
to the course of the market, and this, though a little thing compared 
with the miseries of the nation, was very bitterly resented ^ During the 
debate on the address in reply to the King's speech, much violent 
language was used, the directors of the South Sea company being 
spoken of as " miscreants,"' " the scum of the people," the " parricides 
of their country," " plunderers of the nation," while the " pestilential 
frenzy" was said "to have intoxicated and made drunk all ranks and 
degrees of people with the wine of the fornication of this whore of 
Babylon 2." Sir Joseph Jekyll said that, although some of the directors 
were criminal, he thought, or at least hoped, some were innocent, but 
there were those, who were not directors, who were equally culpable. 
It was contended too, that while there appeared to be no existing law 
to punish the erring directors. Parliament, as the legislative authority, 
both could and should exert itself to make an example of those who 
might be proved most guilty. On the other side, Craggs (who became 
involved by the subsequent enquiry) and Walpole argued that the danger 
would be increased by the commencing of "irritating enquiries," and 

1 Proceedings of the House of Commons, vi. pp. 218-22; Coxe, Walpole, ii. p. 202. 

2 Some Paragraphs of Mr Hutcheson's Treatises on the South Sea Subject, London, 
1723, p. 16; The London Journal, No. 26, reprinted in The Political Letters in the 
London Journal, 1721, pp. 51-6 ; A Brief Debate upon the Dissolving the late Parliament 
and whether we ought 7iot to chuse the same Gentlemen Again, 1722, p. 15. 

332 The South Sea Company [div. x. § 5 h 


that the most urgent duty of the House was to seek a remedy for the 
evil, and to wait till the public mind was calmer before investigating the 
causes of it^. 

It thus appeared at the opening of the session that there were two 
parties. The one which was resolved to demand a strict account from 
all persons, suspected of complicity in the irregularities of the execution 
of the conversion, and the other, headed by Walpole and comprising _ 
persons involved in the scandal, which was determined at all costs to 9 
stifle enquiry. Some idea of the extent to which members of both 
Houses were interested in the scheme may be gathered from an unofficial 
analysis of their avowed holdings in the company, all of which were 
acquired in the spring and summer of 1720. There were 122 of the 
Lords and no less than 462 of the Commons, who were known to have 
been subscribers to the extent of about 3 millions of stock. This sum 
was exclusive of such transactions as had been carried on in the names 
of nominees. These persons were found to have borrowed .^2,600,000 
from the company on the security of their stock. Further, it was 
calculated, though this was necessarily only an estimate, that members 
of Parliament had made profits on the holdings that were disclosed 
of nearly 4| millions 2. Walpole indeed soon obtained the nickname of 
"the screen,"" from his endeavours to shield members of the ministry, 
who were implicated ^ The party for investigation included many 
divergent elements — such as the Jacobites, who wanted to increase the 
discontent in the country ; persons, who had suffered in the speculation 
of the past year and were vindictive; and lastly those, who were 
without any direct pecuniary interest and were anxious to maintain 
the purity of parliamentary administration. Such a body, composed 
of antagonistic groups, could act with little cohesion ; while its op- 
ponents were smaller in numbers, but many of them, as will appear, 
were united together by the need for concealing their guilty secrets. 
A contemporary writer, who however was prejudiced against the 
directors, sums up the situation by saying that "there certainly is 
a majority in the House of Commons that are willing to do themselves 
and the kingdom justice, but they act so little in concert together that 
they are constantly baffled by a set of men whom guilt, money, &c., 
have linked in the closest bond^."" 

On December 12th a motion was made ordering the directors to lay 
a report of their proceedings before the House. This proposal took 
the party, adverse to an enquiry, by surprise, and was characterized 

^ Proceedings of the House of Commons, vi. pp. 221-5. 

2 Index Rerum &; Vocabulorum for the use of Free-holders of Counties and Freemen 
of Corporations, 1722, pp. i, ii, 18, 19. 

3 Coxe, Walpole, ii. p. 216. * Ibid., ii. p. 216. 

Div. X. § 5 h] a Parliamentary Enquiry ordered 1720 333 

by Craggs as " preposterous \" Walpole urged that he was appre- 
hensive, "if they proceeded in a warm, passionate way..., they might, 
by running precipitately into odious enquiries, exasperate the distemper 
to such a degree as to render all remedies ineffectual.'' It was soon 
recognized that, in the temper of the House, it would be dangerous 
to resist the motion, which was eventually canied without a division I 
The directors were suspected of endeavouring to use inducements, 
similar to those employed in February 1720, to escape compliance 
with this order; and, in the meantime, the papers required were not 
produced, until a more peremptory order was made on the 14th^ Such 
documents, as had been presented, were considered on the 15th; and 
an account of the loans, made by the company, was ordered. On the 
19th it was proposed to appoint a select committee to enquire into 
the execution of the act of 1720, whereupon Walpole contended that 
such an investigation would consume much time, and that meanwhile 
the opportunity of arresting the decay of credit would be lost. In 
view of Walpole's proposals, which were introduced the same day, for 
alleviating the existing distress, this motion was not pressed^. 

When Parliament adjourned for a short recess at Christmas, very 
little had been accomplished. So far Walpole and those for whom 
he was acting had succeeded in evading any real investigation. Certain 
papers had been ordered from the South Sea company, and Walpole 
had proposed a scheme for reducing the capital by transferring a part 
to the Bank and East India company. When business was resumed 
on January 4th, 1721, the House was in a state of extreme irritation 
before the consideration of the state of public credit was reached. 
On the introduction of a " bill to prevent mutiny ,"*' Jekyll accused the 
ministry of bringing forward this and other measures to block the 
investigation of the affairs of the South Sea company, whereupon 
Craggs said that opposition to this bill was uncalled for from "a 
person who had received signal favours from the Crown."' Lord 
Molesworth then said, "Is it come to this that every man, who has 
a place, must do all the drudgery that is enjoined him .?" It was then 
moved that leave should be granted to bring in a bill for securing the 
persons and estates of the directors ; and, in the course of the debate, 
it was alleged that there were some men in great stations, who were 

1 Proceedings of the House of Commons, vi. p. 223. 

2 Journals of the House of Commons, xix. p. 381. 

3 On Dec. 13, 1720, Thomas Broderick (afterwards Chairman of the Committee 
of Secrecy) writes to Lord Middleton : " How far ways and means will go to warding 
the blow [of this order] I know not, but they will be used"— Coxe, Walpole, ii. 
p. 204. 

* Proceedings of the House of Commons, vi. p. 225. 


334 The South Sea Company [div. x. § 5 h 

no less guilty than the directors. Craggs evidently believed that this 
insinuation was directed against him ; for, in the midst of a scene of 
great excitement, he declared "he was ready to give satisfaction to 
any man that should question him either in the House or out of it. 
This was virtually a challenge to the whole body of members, and 
Molesworth took it as such, saying that "he had been a member of 
that House upwards of thirty years and never before knew any man 
bold enough to challenge the whole House of Commons and all England 
besides. For his part, though past sixty, he would answer whatever 
Craggs had to say within the House, and he hoped there were young 
members enough that would not be afraid to look him in the face 
out of the House." In the midst of great confusion, Craggs partly 
withdrew the expressions complained of, but the incident produced 
an unfavourable impression ; and, so far from terrorizing the party for 
enquiry, made them more determined to carry their point. Eventually 
a secret Committee of thirteen was appointed, with full powers of 
V investigating all matters, relating to the execution of the act authorizing 
the conversion ^ This Committee was composed mainly, if not altogether, 
of members who were avowedly hostile to the directors. It included 
Thomas Broderick (the chairman), Archibald Hutcheson, the author 
of the Computations^ Sir Joseph Jekyll, and Lord Molesworth 2. The 
Committee pursued its investigations, sitting from nine in the forenoon 
till eleven at night daily, Sundays excepted. At first little progress was 
made. The persons implicated had a long time to prepare themselves, 
and they had tampered with the books of the company. In some 
documents " false and fictitious entries had been made, in others entries 
with blanks, in others rasures with alterations and in others leaves had 
been torn out."" It was found further that " some books had been 
destroyed and others taken away or secreted^.'' The witnesses, who 
were compelled to attend, answered unwillingly, if at all, and it 
appeared that, during the first days of the enquiry, some of them met 
and congratulated themselves on how little had been told"*. In spite 
of these obstacles, the Committee soon became suspicious of the alleged 
sale of stock, while the act was pending, and required an account of the 
receipt of the proceeds for this four hundred thousand pounds of stock 

1 Proceedings of the Horise of Commons , vi. pp. 227, 228. 

2 Ihid., VI. p. 229. 

3 The First Report of the Committee of Secrecy. The seven reports of this 
committee were printed under the title of The Several Reports of the Committee of 
Secrecy to the Honourable House of Commons, relating to the late South Sea Directors S^c. , 
London, 1721. The greater part is reproduced in Journals of the House of Commons, 
XIX., to which, as being more accessible, reference will be made below, except in the 
case of passages given more fully in the original reports. 

* Journals of the House of Commons, xix. p. 428. 

Div. X. § 5 h] Mutilation of Accounts 1720 335 

and particulars of the payments made, when it was entered as re-sold 
and more especially to whom these payments had been made. Robert 
Knight, the cashier, was examined on January 21st; and, though he 
denied having said (as deposed by another witness) that "if the bill 
passed the stock would be well disposed of,'' he admitted that the 
reason of entries being in blank was that " he did not think it proper 
to enter the names of members of Parliament, who had any part of the 
stock in the cash-book ^" He further explained that in a revised 
account, which he had prepared for the Committee, the names of 
members had not been stated as he was not certain of them. This 
second account was made up from letters and papers in his possession, 
and, when he was ordered to produce them, it happened that he was 
summoned to the House of Lords, and his examination was adjourned 
till the following Monday. Knight took the opportunity of absconding, 
and he is reported to have said that "if he should disclose all he 
knew, it would open such a scene as the world would be surprised at^'' 
Though Knight's flight was hurried, it had evidently been carefully 
planned, and he must have had confederates, for he managed to avoid 
extradition under colour of the statutes of " the Joyous Entry "" of the 
States of Brabant. 

On the escape of Knight, a new line of defence was developed by the 
directors. Knight had stated that the distribution of the "stock" in 
question had been the business of the sub-governor and the deputy- 
governor ; but, in spite of this, it was now deposed by witness after 
witness that Knight was the person who had been responsible. It 
turned out that many entries and notes, relating to these transactions, 
bore the cashier's signature and that these had come before the Com- 
mittee. Therefore, since there was no denying Knight's handwriting, 
his escape was connived at by the recipients of bribes, while the 
directors endeavoured to make him the scape-goat. It is almost 
needless to remark that a subordinate official could have no power to 
deal in such large amounts, nor could he obtain access to the persons 
who were suspected of receiving the so-called stock, without the 
authority of more responsible persons. 

The Committee was now hard pressed to obtain evidence. Even 
from the mutilated accounts before them, it was unquestionable that 
over a million and a quarter had been expended in bribes, under 
colour of the payment of differences on stock. The items of the stock, 
alleged to have been distributed, were admittedly compiled so as to 
mislead, and the witnesses professed ignorance of the details, llie 
problem then was how the Committee could trace any "stock" to a 
specific source. Knight's evidence not being available, it became 
1 Journals of the House of Commons, xix. p. 432. ^ /jf^.^ xix. p. 436. 


The South Sea Company [div. x. § 5 h 


necessary to accept statements of what other witnesses had heard from 
him. On January 27th, for some reason unknown, Sir John Blunt gave 
the Committee " the first material information "" it had received, but it 
was Robert Surman, the late deputy-cashier, who provided the necessary 
details. He had assisted Knight in preparing the account of the stock 
disposed of which had been submitted to the Committee, and " he wrote 
down several names which Knight read to him out of a book with a 
green cover, wherein Knight had kept an account of the stock entered 
in the cash-book of the company and also of subscriptions. He believed 
that Knight did not give him all the true names, because sometimes 
Knight turned over a leaf or two, without giving him a name (although 
there were in those leaves names of persons with whom an account was 
there entered). He remembered that in the same book, at the head of a 
large account, wherein the debtor side came near to the bottom of the 
page, he saw the name of John Aislabie Esquire, late Chancellor of the 
Exchequer, but Knight turned over that leaf and did not give him that ! 
name to insert in the account.**' He also deposed to seeing the names ofl 
James Craggs, the Postmaster-general, and of Charles Stanhope, Secretary ; 
of the Treasury, "• all which names were left out of the account ; and, 
after it was thus drawn out from the green book and from some letters ! 
which Knight delivered to Surman, the sums not coming right, Knight j 
made several alterations in the names and prices, and inserted other 
names and prices to frame the account in the manner in which it now! 
appears ^" Subsequent examinations added the names of Lord Sunder- 
land and a group of female favourites of George I. — the Duchess ofl 
Kendal, her two nieces and the Countess of Platen. Besides, it sub- 
sequently transpired that over thirty members of both houses of] 
Parliament were subject to suspicion of having obtained stock without [ 
making payment '^. 

Although these persons (or many of them) had been suspected o\ 
having received payment for their support of the company, it was only] 
now that the Committee had obtained sworn testimony, justifying the 
belief in their complicity. But as yet, the case was far from being] 
complete. Surman's evidence depended on the accuracy of surreptitious 
glances at the hastily turned leaves of a book which he was not intended] 
to see. To obtain corroborative evidence, that would have been com- 
pletely satisfying, would have protracted the enquiry indefinitely, if the! 
whole field were to be covered. Therefore the Committee confined its] 
investigations, in the first instance, to the cases of persons actually in 
the ministry. The directors were very closely questioned, and Blunt 
revealed that Knight had shown him a note for <^50,000 stock, signed 

1 Journals of the House of Commons, xix. p. 427. 

2 Second Report in Journals of the House of Commons , xix. p. 577. 

Div. X. §5h] Knighfs ''Green Boole" 1720 337 

by Sunderland, and that he had recognized the signature. Other 
directors concurred in admitting that they heard from Knight of stock 
to be given to Sunderland, as well as d^30,000 to James Craggs, senior, 
the Postmaster-General. The order alleged to have been signed bv 
Sunderland was not forthcoming, and there was no corroboration of the 
charges. The position of Craggs was different. He escaped the charge 
hanging over him by committing suicide, and it remained for the House 
of Lords, in subsequent proceedings, to bring to light additional evidence 
in his case. James Craggs — the Secretary of State — died of small-pox 
at the time the report was issued, so that with this family, as with the 
Stanhope's, the strain of the charges made had already resulted m 
several deaths. 

There remained the allegations against Charles Stanhope and Aislabie, 
and in both cases the testimony of the directors was corroborated by 
documentary evidence. As confirming the depositions that Stanhope 
had written asking that ^10,000 or .£^12,000 stock should be taken in 
for him, while the bill was pending ; it was proved, from the accounts of 
the Bank of England, that between May and September, sums, amounting 
to ^£^51,736. 13^., had been paid Stanhope from the account of the South 
Sea company. Not only so, but there were some most remarkable trans- 
actions in reference to 6^^50,000 of the stock under investigation. On 
March 21st, 1720, it had been transferred to the Sword Blade banking 
company — the chief partners in which were Sir George Caswall and 
Jacob Sawbridge, the former being a member of Parliament and the 
latter a director of the South Sea company. On June 11th this 
d^50,000 stock was placed to the credit of "Charles Stanhope" in the 
books of the Sword Blade company. On or about the same date the 
stock was sold by the order of Sawbridge realizing ^375,000. This 
same £5Qfi00 stock was identified as part of the fictitious stock entered 
at 250 ; therefore, if the whole affair consisted in the paying of a 
difference on stock which had never been actually purchased, the sum, 
entered in the books of the Sword Blade company to be paid to the 
person who was to receive the benefit of the transaction, would consist 
of the excess of the actual price realized over the supposed purchase 
price. In other words, it would be the difference between ^375,000 
and ^125,000 and not, as it would have been had the stock been paid 
for in the first instance, the whole purchase price. It was proved, by 
entries in the books of the Bank, that bills had been drawn in favour of 
Charles Stanhope for the difference, not for the total price realized, le. 
for .£^250,000 instead of ^375,000, and that this sum was paid him m 
December, 1720. 

Therefore the evidence was fairly conclusive that Stanhope had 
received the benefit from the advance in quotations, without havmg 


S. 0. III. 

338 The South Sea Company [div. x. § 5 

paid for (or given security to pay for) the stock which was eventually 
sold for his benefit, and that the Sword Blade company " covered " the 
stock in the sense of concealing Stanhope'*s name until the sale had 
been made. ^ 

The further actions of the partners in the Sword Blade bank con-H 
firmed the doubtfulness of Stanhope's bona fides. His name disappeared 
from the body of the ledgers, being altered into " Stangape," while the 
original " Stanhope " was inadvertently retained in the index. Further 
the bills for the payment of i^250,000 were admittedly destroyed; so 
that strong, if clumsy efforts, were made to conceal the identity of the 
person who received the money. 

Lastly, there was also corroborative evidence as to the complicity o: 
Aislabie. He was proved to have been involved in very large speculativi 
transactions in South Sea stock, both before and after the passing of th 
bill. It was discovered that Edmund Waller, his son-in-law, had an 
account with the Sword Blade company, which amounted in all to ? 
.£^794,451. 15*. m., and the balance of which was ^677,600. This wa«f 
made up of dealings in stock, and it was admitted that a part was in 
trust for Aislabie. He also had a large account with Hawes, one of the 
South Sea directors, about which disclosures came later. A third set of 
transactions was placed before the Committee by the broker employed. 
It related to i?77,000 stock, which showed at the alleged purchase 
prices the miserable profit of .^'SOS. 10*.^ Almost all this stock had 
been entered during the time the bill was pending — 6^57,000 had bee; 
purchased in the market, but d^20,000 was entered as " Hawes pe 
Surman^." This description suggested the stock contained in th 
"Green book," and was the subject of an exhaustive enquiry in the 
second report of the Committee of Secrecy. Aislabie had asked for a 
copy of the account of his brokers ; and, on seeing this entry, declared, 
" with execrations not fit to be repeated, that he knew nothing of it,""* 
and that his broker must make the same statement on oath before the 
Committee^ Further, Surman deposed that, on April 11th, 1720, 
bill for =£^27,878. 19*. Qd. was drawn in Aislabie's favour, but that th 
entry of it in the cash book had since been erased. These facts — the' 
dealing in the stock of a company by a Chancellor of the Exchequer 
while that company was promoting a bill in Parliament, the supposed 
ownership of stock by him which was not purchased on the market, the 

1 This account shows that Aislabie sold his stock, as a rule, on the advance ii 
the price. On one occasion he was in the position of a bear. These facts sug-ges 
that the inner group of directors had not told him of the plans for forcing up tl 

2 First Report in Journals of the House of Commons, xix. pp. 429-40. 

3 Ibid., XIX. p. 460. 






Div. X. § 5 h] The tracing of the Fictitious Stock 339 

payment of a large sum of money to him by that company immediately 
after the passing of the bill—were all circumstances scarcely susceptible 
of any possible innocent explanation. Curiously enough, what was 
wanting in the evidence and reports of the Committee, Aislabie and 
his friends inadvertently supplied in the House of Commons; but, 
before passing on to the remaining scenes of the drama, it is worth 
pointing out that the evidence against the persons implicated is 
strengthened by the fact that the fictitious stock, which they were alleged 
to have received, coincides with an entry of the distribution of that 
stock. Aislabie admitted having, as he said, purchased, d^22,000 stock. 
Stanhope was alleged to have received from ^6*1 0,000 to c£^l 2,000, 
Sunderland ^^50,000, Craggs ^30,000. Now if the average of the 
figures assigned to Stanhope be taken, i.e. £\\fiOO, a total of .£'113,000 
stock is obtained, which exactly agrees with an entry in the account of 
"stock sold to sundry" which records a "sale'' of ,^113,000 stock on 
February 27th. 

Statement showing distribution of £llSfiOO Jictitious stock. 

Stock said by witnesses to have been Stock admitted as " sold to sundry " : 

received by persons underwritten : 

Sunderland £50,000 

Craggs £30,000 

Aislabie £22,000 

Stanhope £10,000 or 

£12,000, say £11,000 


Besides the effort to trace the fictitious stock, the fii-st report of the 
Committee of Secrecy dealt with the various other irregularities, com- 
mitted by the directors. Attention was drawn, not only to the loans 
made on the security of stock, but also to the fact that differential y 
treatment was granted to certain borrowers, both in the loans being 
larger than the limit authorized by the resolutions and on a smaller 
margin. It was also shown that the first two money subscriptions had 
been arbitrarily augmented, and the last two contracted, in both cases 
with a view to giving illicit profits to persons whose names (except in 
one instance) were not disclosed. 

This report was presented to the House on February 18th, 1721, ^ 
and the second part on the 25th. Reference was made to the trans- 
actions in stock of Aislabie and Stanhope, both of whom protested their 
innocence, and demanded that a day should be fixed for hearing them 

1 This price was higher than that entered in the note given to Aislabie— it 
represents the average of the fictitious prices on the notes given by Knight. 


Feb. 27, £113,000 at £175 ^ 


The South Sea Company [div. x. § 5 

in their own defence. Accordingly the 28th was fixed for the hearin| 
of Stanhope. 

The Committee on that date confined the issue to two charges, nameh 
the taking in of d£^l 0,000 stock on his behalf, without any consideration, 
while the bill was pending and the payment of the difference out of the 
cash of the company, and secondly that ^50,000 stock had been taken 
in by the Sword Blade company for him, and that the difference, 
amounting to .9^250,000, had been received by him. An unexpecteclj 
turn was given to the examination, when two of the partners in the 
Sword Blade company alleged that the ^50,000 stock was received bj 
that concern from the South Sea company wholly for their benefit\* 
The tales told by the different partners were far from consistent, as foi 
instance that this stock was to cover bear sales, or again that it wj 
stock transferred after £10fiQ0 had been pawned to the South S( 
company and d^l 05,000 lent thereon^. Obviously there was an absence 
of any precise explanation as to the payment for the d£*50,000 stock; 
and it may have been with a view to the suppression of this informatioi 
that, as late as January 3rd, 1721, particulars of this loan had beei 
omitted from the statement of loans laid before Parliaments It wj 
generally believed by members that the Sword Blade company hi 
held the stock in trust ; but, in view of the acceptance of responsibility 
by the partners, this part of the charge fell to the ground. In referenc 
to the allegation that Stanhope had accepted the difference on the 
dfi'l 0,000 stock, no evidence was produced that he had paid for it, am 
he met the charge by asserting that Knight had the keeping of a lar^ 
sum of his money, out of which payment had been made^ Evidently 
such a defence was a forlorn hope, and it was recognized as such, foi 
Stanhope's friends were endeavouring to secure votes in his favourj 
partly by inducing waverers to support him out of respect for th( 
memory of his relation the late Lord Stanhope, who had died tragically 
in the House of Lords through the excitement of a debate on tht 
national credit, and partly by persuading a number (it was said 
many as forty) to abstain from voting S It was probably owing t( 
these manoeuvres, rather than the strength of the defence, thai 
Stanhope was acquitted by a majority of only three votes — th< 
numbers being 180 to 177. 

The evidence in relation to the £50fi00 stock pointed so strongl^ 
to the culpability either of Stanhope or of the partners in the Swore 
Blade company that Stanhope's escape meant their condemnation ; anc 

1 Proceedings of the House of Commons, vi. p. 235. ^ Coxe, Walpole, ii. p. 211, 
3 Court Book, vi., f. 117; Brit. Mus. Add. MS. 25,497. 
* Proceedings of the House of Commons, vi. p. 236. 
^ Coxe, Walpole, ii. p. 209. 

Div. X. § 5 h] Cases of Stanhope, Aislabie, Caswall 341 

accordingly, when, on March 10th, the case of one of them. Sir George 
Caswall, was heard, it was resolved that he had been guilty of " corrupt, 
infamous and dangerous practices,""' and an order was made for his com- 
mittal to the Tower\ 

Caswall was not the first to be condemned, for on March 8th similar 
resolutions had been passed in the case of Aislabie. The charges against 
him were similar to those Stanhope had had to answer. Perhaps Aislabie 
may have suffered from the great popular indignation at the acquittal of 
Stanhope, but, in any case, he and his friends had made an acquittal 
impossible without causing the whole proceedings to be a travesty of 
justice. The Committee, in its second report, had commented on the 
huge amount of stock which Hawes had sworn he had dealt in on 
Aislabie's account, amounting to =£^842,000. Each of the persons 
concerned kept books, recording the transactions, which were signed 
by both at each settlement. The House peremptorily demanded the 
production of these accounts; and finally, under pressure, Aislabie 
promised to produce them on the following day. When the time came 
it was said by Hawes that Aislabie had forced him to deliver up his 
copy, and thereupon the two books had been torn up and burnt ^ 
Needless to say, this revelation produced a most unfavourable im- 
pression. There was also the sworn account of large transactions in 
stock before the bill was passed. It is true that Aislabie endeavoured 
to explain the item of £WfiOQ stock, entered as received from Surman, 
by producing a receipt, signed by Knight for payment received by him 
partly on December 10th and 19th and amounting to .£'27,480 for this 
stock at alleged market prices, or with certain charges to ^27,810 in alP. 
But there were two reasons why this receipt was subject to suspicion. 
In the first place, it was proved at a later stage that a fraudulent 
receipt had been given to CraggsS so that the mere production of 
a discharged account cannot be accepted. What in fact appears to 
have happened was that Aislabie did make a nominal transfer of the 
money, or of money and security, and that subsequently it was returned 
to him by Knight, whereupon (as stated in the second report) the entry in 
the cash-book was erased. This interpretation of the episode is suggested 
by the practical identity of the amounts of the erased entry and of the 
receipted contract note— the latter being .^27,480 and the former 
.£^27,378. 19*. Qd. There was another very discreditable episode in this 
case. On May 8th, when the bill for forfeiting the estates of the 
directors (in which part of Aislabie's property was to be included) was 
before the House, General Ross, a member of the Committee of Secrecy, 

1 Proceedings of the House of Commons, vi. p. 237. 

2 Ihid., VI. p. 236; Coxe, Walpole, ii. p. 210. 

3 Proceedings of the House of Lords, in. p. 160. * Ibid., m. p. 184. 

342 The South Sea Company [div. x. § 5 

stated that in the forenoon. Vernon (a connection of Aislabie'^s) had 
asked to see him, and said that there was " a disposition in the House 
to show favour to Aislabie, and that it was in General Ross' power to 
do him a service, and for the same Aislabie would make him any 
acknowledgment in any manner he thought fit^"" The House resolved 
that this request contained evidence of a corrupt design, and Vernon 
was expelled. 

Aislabie next appealed to the Lords and made two very long 
speeches in his defence. These traversed the same ground and con- 
sisted partly in denials of the charges of the Committee, partly of 
evasions of those charges. Aislabie had complained, with more reason 
than perhaps he knew, of his disadvantage in being without the aid of 
counsel, for he made several admissions that damaged his position, and 
sometimes betrayed a callousness, in reference to financial uprightness, 
that was offensive even to the lax conscience of the eighteenth century 
politician. For instance there was no proof, but only a strong suspicion, 
that any part of Waller's balance with the Sword Blade company belonged 
to him, but on this occasion he stated that ^£^53,000 was his property. 
Then, when he came to deal with the purchases and sales of stock before 
the passing of the act, he seems to have thought that it was a sufficient 
answer that the purchases were made with his own money and therefore 
could not be a breach of trust ^ — as if there might not be more serious 
frauds on the nation than speculating with public moneys. It is some- 
what curious that the concluding sentences of the second speech contain 
a half-punning allusion both to the corrupt offer made to General Ross 
and to the advocacy of Walpole, a somewhat flippant conclusion to a 
defence of any man's honour — " I heartily wish," he is reported to have 
said, " that the worst of my enemies may in their day of trial, after such 
a prosecution and such an enquiry, be able to make their innocence abide 
the test as well as mine has done. I have made no base submissions, no 
unworthy applications to any man, notwithstanding the vanity of one 
of the Secret Committee. My innocence has been my only screen^ and 
your Lordships' justice is my refuge." The Lords unanimously resolved 

^ Proceedings of the House of Commons, vi. p. 245. 

2 Proceedings of the Home of Lords, iii. p. 162 ; Mr Aislabie' s Second Speech on his 
Defence in the House of Lords, July 20, 1721, p. 6. 

^ There had been considerable misappropriation of public moneys by certain 
officials. Thus Richard Hampden, Treasurer of the Navy, was charged with having 
used over £30,000 of the funds in his custody for the purchase of South Sea stock ; 
while it was admitted by Sir Harcourt Masters, a Receiver of the Land Tax for 
Middlesex, that he had employed close on £40,000 belonging to the Crown in 
speculation. The Several Reports of the Committee of Secrecy, 1721, pp. 68, 69. 

^ Walpole was called "^the screen" of the persons accused. 

Div. X. § 6 h] Cases of Sunderland and Craggs 343 

to refuse Aislabie's petition, and to include his effects in the forfeiting 

There remained the cases of Sunderland and Craggs. In that of the 
former, there was no corroborative evidence ; and, on the accused giving 
an explicit denial to the charge, the issue was narrowed down to whether 
his word or that of Blunt should be accepted. The House of Commons, 
which heard the witnesses on March 15th, decided, mainly on party 
grounds, that Sunderland was innocent by a majority of 233 to 172 — 
a verdict which may in part have been occasioned by the knowledge 
that, so far from gaining, the accused had lost money during the 
speculation of 1720 2. 

Craggs, having perished by his own hand, the House of Commons 
did not pursue the case against him, beyond resolving that the increase 
in his estate during the speculative period should be confiscated ; and, 
while his representatives were being heard in the House of Lords against 
this resolution, a most damning piece of evidence came to light. As with 
Aislabie, it was alleged, apparently in the most circumstantial manner, 
that the purchase-money for stock had been paid, but, on Sawbridge 
being pressed he, after much evasion, confessed that the money was 
never paid, nor had there ever been any intention of paying it^ 

It has sometimes been said that the proceedings in Parliament were 
vindictive, and that there was a disposition to condemn the accused on 
mere suspicion ^ The completeness of the proofs adduced in the cases 
of the four ministers implicated, obtained under great difficulties, owing 
to the absence of Knight and the concealment of material books and 
documents, is sufficient to show that, even in a time of panic, justice 
was still administered. On the contrary, in this case punishment lagged 
far behind ill-doing, for the convictions only accounted for o^52,000 of 
the d^574,500 fictitious stock, so that, as a matter of fact, only one- 
eleventh part of the bribes had been traced, and the recipients punished. 

The final act of retribution fell upon the erring directors. On the 
earlier disclosures of the Secret Committee, resolutions had been passed 
condemning their malpractices, and such of them as were members of 
Parliament had been expelled. As evidence accumulated, those who 
were most culpable were committed to the Tower. While the House of 
Commons was engaged in hearing the charges against the ministers 
implicated, a separate investigation was being made by the House of 

1 Proceedings of the House of Lords, in. p. 184 ; Mr Aislabie s Second Speech, 
pp. 21, 22. 

2 Proceedings of the House of Commons, vi. p. 237; Coxe, Walpole, ii. p. 190; 
Mahon, Hist, of England, ii. p. 21. 

3 Proceedings of the Hou^e of Lords, iii. p. 184. 
* Cf. Gibbon, Miscellaneous Works, i. p. 16. 


The South Sea Company [div. x. § 5 h 

Lords. As a result of this , enquiry, evidence came to light showing 
that some of the directors not only had bribed members of the ministry, 
given preferential treatment to certain persons, and inflated the price of 
the stock, but also that they had betrayed their fellow stockholders by 
fraudulently maintaining high prices long enough to enable them to 
sell their personal holdings of stock, either to the company or the 
public ^ This characteristic, as well as others, differentiates the conduct 
of the inner group of directors of the South Sea company from that of 
the committees of the old East India company in 1694. The latter 
availed themselves of bribery, under the pressure of events, and according 
to the custom of the time. In spite of threats and penalties, the court 
remained loyal to the stockholders. The most prominent South Sea 
directors, on the contrary, betrayed their fellow stockholders; and, so 
far from being forced into bribery, they occupy the role of tempters, not 
of the tempted. 

After the passing of the act, restraining the governors and directors 
from leaving the country, there remained the fixing of the penalty to be 
exacted from them. An inventory of their estates was obtained, from 
which it appeared that some, who were already implicated in the most 
doubtful transactions, had made large gains. For instance the estate 
of Sir John Fellowes, the sub-governor, was ^243,000, and that of 
Sir Theodore Janssen was the same amount. There were five other 
estates over d^l 00,000 — those of Sir John Blunt, of Chester, of Gibbon, 
of Read and of Surman, the deputy-cashier. Many of the remainder 
had property exceeding <^50,000, but in ten cases the estates were under 
c£'25,000, showing that a number of the directors had been excluded 
from participation in the knowledge of the causes of the market fluctua- 
tions that had been arranged secretly by their colleagues. 

There was a party, both inside the House of Commons and through- 
out the country, that clamoured for the most severe measures. Capital 
punishment and imprisonment were demanded, but it was eventually 
decided that the estates of the directors and prominent officials should 
be confiscated, subject to certain allowances. The penalty, exacted 
from Aislabie and Craggs, was the restoration of all property, obtained 
in the one case from October 1st, 1718, and in the other from De- 
cember 1st, 1719. The nett proceeds were to be handed over to the 
company. Thus this bill, in the cases of Aislabie, the representatives 
of Craggs and any of the directors who had small property before 1720 
and who had largely increased it during that year, was one of restitution, 
not of the exaction of a penalty. When the scale of allowances to be 
granted was debated, a few members lowered the dignity of the House 

1 Journals of the House of Lords, xxi. p. 484. 

Div. X. § 5 h] Pmiishment of the Directors 1720-1 345 

by taunting the unfortunate directors, some proposing allowances of 
one shilling, or a few pounds. Others recalled instances of discourtesy 
when the South Sea directors had been " as kings '" ; and, in the case of 
Grigsby, the accountant (who having become suddenly well-to-do had 
all the arrogance of the parvenu and had ordered his coachman to feed 
his horses with gold), it was proposed that he should be allowed out of 
his estate just as much gold as he could eat^ These were mere ebulli- 
tions of personal feeling from individuals that must be expected, and 
allowed for, after any great national calamity. 

The general temper of the House, while not lenient, endeavoured 
to make itself just by considering each individual case on its merits. 
Including Aislabie and the representatives of Craggs, there were thirty- 
five estates subject to confiscation. In three cases, where the persons 
involved owned property valued altogether at under .^^1 5,000, practically 
the whole amount was returned them, as an allowance. In seven estates 
more than half the value was allowed. Most of these were under 
.5^20,000, but one of them— that of Gore— was returned at ^38,936, the 
amount returned him being ^£^20,000. In other cases where the estate 
was large, and the director had not been involved, a very considerable 
return was made. Thus Sir Theodore Janssen received back d^50,000 
out of <£>243,244, and Col. Raymond .£'30,000 out of .£^64,373. Men, 
who were wealthy and had some knowledge of the indirect proceedings 
of their colleagues, were permitted to retain d^lO,000 each. More 
drastic measures were taken with nine persons — Joy, Astell, Blunt, 
Hawes, Holdich, Lambert, Sawbridge, directors, and Surman and 
Grigsby, officials. The doings of all these had been recorded in the 
reports of the Committee of Secrecy. Joy and Astell, as having been 
implicated, received ^5,000 out of their estates'^. There was con- 
siderable difference of opinion in the cases of Holdich and Lambert, 
some being against any material allowance, others in favour of one of 
considerable amount. Both, after a division, were allowed to retain 
c£5,000. The same amount (out of .£121,321. \0s.) was granted 
Surman, and Sawbridge was to receive the same out of <£^77,254. 
There was a long debate on the allowance to be made to Blunt. His 
estate was returned at £183,349 ; and, in view of the assistance he had 
given to the Committee of Secrecy, it was proposed by some of the 
members that he should be permitted to retain £10,000. This was 
opposed by several speakers, who had suff*ered in some of Blunt's former 
promotions. He had defied the House of Lords, refusing for a long 
time to answer questions similar to those he had replied to previously 
in the Commons. His over-bearing manner had probably as much to 

^ Proceedings of the House of Commons, vi. pp. 247-52. 

2 Joy's estate was £40,105. 2s. Od., Astell's estate was £27,750. 19*. 8|</. 

346 The South Sea Company [div. x. § 5 h 

do with the reduction of his allowance to ^£'1,000 as the large part he 
undoubtedly played in the most discreditable episodes of the year 1720. 
Of all the directors, Hawes, who had been concerned in transactions 
with Aislabie, received the smallest allowance, on the ground that he 
had encouraged the speculation and had been responsible for the ruin of 
some clerks in the Navy Office, whom he had induced to speculate, it 
was said, with public money. His estate was ^400,031, of which he 
was only to retain the odd £%\^, 

I. The Final Re-adjustment op the South Sea 
Scheme by Parliament (1721). 

Not only was it necessary that Parliament should fix the re- 
sponsibility for the miscarriage of the conversion of the National 
Debt, but it had an even more important duty to discharge in 
retrieving the discredit of the South Sea company; for, since that 
institution was the agent of the government, as long as it remained in 
an embarrassed condition, the credit of the State would suffer. Under 
the re-arrangement of terms in September 1720, all the holders of 
debts, who converted in that year, held South Sea stock at a nominal 
price of from 375 to 400. The market price at the end of the year 
was between 140 and 200, so that the dissatisfaction of the holders, 
who had converted, was very great. Many efforts were made to obtain 
some revision of the terms, which the owners of securities had accepted, 
and it was possible that the contracts made by the South Sea company 
might have been annulled. Such an occasion was the touchstone of the 
national honesty ; for, if the agreements made and accepted between the 
State and the company had been broken, in the condition of the finances, 
repudiation would have followed. The conduct of Parliament in this 
crisis fully confirms the account given above of the general character of 
even-handed justice meted to the directors, and it remained to extend 
the same treatment to the stockholders who had come into the com- 
pany, as far as was possible in the circumstances. The policy of 
fulfilling strictly all the national agreements was admitted as the 
guiding principle of the re-adjustment ; and it may be said that the 
results of the panic were not all loss since the country was enabled, 
in the midst of fraud and financial confusion, to maintain the national 
integrity so that its engagements should be duly met. It was literally 
true that the national honour, rooted in dishonour, stood. 

1 The inventory of estates is printed in Proceedings of the House of Commons, vi. 
p. 251. 

Div. X. § 5 1] The Conversion modified 1721 347 

Although Walpole had, for party reasons, endeavoured to secure the 
acquittal of the implicated ministers, to him belongs the credit of pro- ^ 
posing and carrying through a scheme for restoring the credit of the 
company, which was the best that could have been devised at the time. 
This scheme was very simple. Walpole saw that the State could not 
exact the money promised by the company. It was proposed therefore 
that this should be remitted, and it would follow that the surplus stock, 
being exempted from this liability, would be rendered available for the 
relief of the subscribers. The speculative possibilities of such stock 
had, as has been shown, been an element of danger and might become 
such again, therefore it was determined that this stock, together with 
the amount realized from the estates of the delinquent directors and / 
ministers, should be divided amongst the stockholders who had sub- 
scribed their government debts in 1720 according to certain ratios. 
To prevent the danger that might arise from the aggregation of capital, 
powers were given to the Bank and East India company to " engraft," 
into their respective capitals, nine millions each of that of the South 
Sea company. As its issuable capital was ^38,000,000, a reduction of 
.g^l8,000,006 would have brought it to ^20,000,000 and would have 
removed the great disparity between the nominal capitals of the three 
companies. This proposal was permissive, not compulsory, and the 
East India company did not purchase any South Sea stock and the 
Bank only ^4,000,000. In addition, .£^2,000,000 stock was cancelled 
(but afterwards re-created), so that in 1722 the capital stood at nearly 

It was far from easy to pass these proposals, which were very warmly 
debated on December 19th, 1720, and were carried in principle, apart 
from details, by 259 votes to 117 ^ On the second reading of the bill a 
violent and angry mob of persons, who had converted their annuities 
and redeemables into South Sea stock, invaded the lobbies of the House. 
It required the reading of the " Riot Act " before they could be induced 
to disperse, and many were expelled from the precincts exclaiming — 
" You first pick our pockets and then send us to gaol for complaining^." 

The act, embodying this re-arrangement of the scheme, provided ^ 
that the surplus stock should be divided in the following proportions : 

On each £100 Long Annuity, an addition to the South 

Sea stock received in exchange of 

On each £90 Short Annuity, an addition to the South 

Sea .stock received in exchange of 
On Annuities of £100 in the Lottery 1710, similarly ... 
On Annuities of £98— Blanks Lottery 1710, similarly 
On each £100 of capital in the redeemable debts 

exchanged ... ... 33 6 8 „ 

* Proceedings of the House of Commons, vi. p. 226. ^ Coxe, Walpole, i. p. 155. 

£ s. 
203 6 


8 stock 

73 9 

65 16 

126 14 

4 „ 
8 ,. 
8 „ 


348 The South Sea Company [div. x. § 

J. The Incidence of the Losses remaining to be borne 


The knowledge of the exact additions to each proprietor's holding 
enables a calculation to be made as to how he was ultimately affected! 
by the re-adjustment. The two classes of debts, held in largest quantities, 
were the long annuities and the redeeraables. There was only one sub- 
scription of the latter, but there had been two of the former. Therefore, 
holders of a long annuity of ^100, who had subscribed it at the first 
and second subscriptions respectively and who had not sold the stock 
received in exchange, would be affected in the manner shown in the 
following tables, in terms of the original purchase price. 

The effect of the South Sea conversion on a Long Annuity of c^'lOO 
subscribed, which was originally acquired at \Q years'' purchase. 

A. The effect as to Capital. 

£100 long annuity, at 16 years' pur- 
chase, cost ... 

The annuitant on converting received 
in cash 

Balance of original cost payable in 

South Sea stock ... 
Which, at the rates of exchange, yielded 


Add 10 % Midsummer dividend 1720, 

paid in stock 

Add stock distributed, out of the 

surplus stock, on the re-adjustment 


Total stock received in exchange for 
original purchase prices of £1,025 
and £1,200 respectively 

Equivalent to a purchase of South Sea 
stock at 


Dividend on cash payment at 5 °/„ 

„ stock at 5 °/„ (subject to 

reduction to 4 7o) 

Total income annually 1721-7 

Original income (terminable on expira- 
tion of annuity) ... 

Loss of income (subject to further re- 
ductions) 22 11 8 25 16 8 


ion I. 



)scription II. 



£ 8. d. 

£ 8. d. 












6 8 
6 8 

203 6 8 

1,083 6 8 


6 2 

110 15 5 

ct a^ to Income. 


£ s. d. 


£ 8. d. 








13 4 


54 3 4 


8 4 

74 3 4 




Div. X. § 5 j] Final Position of Stockholders 349 

The effect of the South Sea conversion on d£*l,000 capital of the 
redeemable debts subscribed^ originally issued at par. 

The effect as to Capital. 

£ s. d. 

Original issue-price £1^000 

Exchanged for South Sea stock, after the re-adjustment of 

September 1720 262 10 

Add 10 7o stock dividend 26 o 

Add stock distributed out of the surplus stock 1721 ... 333 6 8 

Total stock received in exchange 622 1 8 

Thus South Sea stock was held, in terms of issue price, at 160|. 

B. The effect as to Income. 

£ s. d. 

£ s. d. 



31 2 

31 2 

Original dividend on £1,000 capital 

Dividend on £622 South Sea stock, received in exchange 

Annual loss of income 18 18 8 18 

Comparison of the final position of the Long Annuitants 
and Subscribers of Redeemables. 

Prices at which 

South Sea stock 

vas held in terms 

Loss of income on 

of original 

South Sea stock, 

purchase price 

dividend of 5 % 









Long annuitant, subscription I. 
,, ,, „ 11. 

Holder of redeemables at 57o 

)} )i J} ^ lo 

It will be seen from the foregoing figures that the position of the 
long annuitant, as to capital-value, in terms of the original cost of 
the investment, was not unfavourable. Those who had subscribed in 
May 1720 held their South Sea stock as low as 105|, and those, who 
had exchanged in August, at llOf , both in terms of the highest price 
of issue. It is to be remembered that, with the improvement in credit 
from 1717 to 1719, the price of annuities was higher, and the purchaser 
of that period would hold his South Sea stock at a proportionately 
higher price. Still it is noteworthy, in spite of the views as to the great 
losses occasioned by the speculative era and of the high prices at which 
the stock was exchanged, that in terms of capital-value, on the basis of 
an original purchase price at 16 years, these proprietors held their stock 

1 Some of these loans were borrowed at 6°l^, some at 47o- 

350 The South Sea Company [div. x. § 5 

at a figure which left them a large margin of safety in comparison wi 
the lowest price of the year 1720. 

It was rather from the diminution of income that the long annuitant 
suffered. Most of these securities were held for marriage-portions and 
jointures^, and therefore the beneficiaries constituted just that class ■ 
which feels any change of the kind most severely. The gain that 
accrued to them from converting, namely the substitution of a per- 
manent source of income for one that was of a wasting nature, was not 
recognized as a sufficient compensation, for any of the long annuities 
would have out-lasted the life of a woman married by 1720. It is true 
that the percentage, represented as reduction of income, might have 
been made good by the trading profits of the company, but it was 
undesirable that settled incomes should be made subject to trading- 
risks. On the other hand, the eventual reduction of income would 
tend to become greater, since the debt due to the company was re- 
deemable ; and, as a matter of fact, the interest was subject to 
reduction from 5 per cent, to 4 per cent, and was later lowered to 

3 per cent. Therefore, as far as could be seen in 1721, the most the 
company could be expected to do would be to maintain a 5 per cent, 
dividend out of its trading profits ; and, on this basis, the figures given 
for loss of income would not have been exceeded. 

The real hardship fell upon the owners of redeemable debts, who 
converted. They held their stock at 50 per cent, higher than the long 
annuitants and they had to face a greater loss of income. Instead of 

4 or 5 per cent., they were reduced to a return on their original invest- 
ment of a fraction over 3 per cent., even on the company succeeding in 
maintaining a steady 5 per cent, dividend. The hardship borne by the 
long annuitants was an accidental one, arising out of so many of these 
securities forming settled estates, whereas that borne by the redeemables 
was universal, and affected any holder whatever his environment may 
have been. 

Then there is the position of the State, as affected by the conversion, 
to be considered. It would have been inequitable to have thrown the 
whole loss on the shoulders of the debt-holders. For, in so far as the 
authorized agents of the State, who had been appointed to control the 
execution of the scheme, connived at the spoliation of owners of govern- 
ment debts, so far the State was responsible. The penalty for this 
\ laxity was paid by the remission of the sum receivable from the 
company for the privilege of converting the debts. The country as 
a whole suffered by the breakdown of credit and the failure of bankers 2. 

1 Proceedings of the House of Commons, vi. p. 114. 

2 An attempt is made to provide a quantitative estimate of this loss in Considera- 
tions on the Present State of this Nation as to Publick Credit, Stocks, the Landed and 
Trading Interests, London, 1720, pp. 19-31. 

Div. X. § 5 j] Effects on the Nation 1720-1 351 

Against this however is to be set the gain accruing from the reduction 
of interest, which was applied to the gradual paying off of the South 
Sea capital, eventually resulting in the extinction of this portion of 
the debt. 

It might be hastily concluded that, since the price, towards the end 
of the year 1720, was not far removed from that obtaining before the 
conversion had been undertaken, the speculating class as a whole had 
neither gained nor lost, the profit of one individual having been the 
loss of another. Such an estimate however overlooks the fact that the 
stock at the close of the year had been more than trebled, and that 
nearly one-third of the total had been issued as against cash at prices 
from 300 to 400, and that therefore a reduction of the quotation to less 
than one-half of that at which these securities had been allotted, meant 
a most serious loss in the aggregate. The distress thus occasioned, 
serious as it was, became trifling when compared with the enormous 
transactions on a credit basis. Immense purchases were made on 
margins, and "o